samba ar 2018 cover - financials.psx.com.pk

Vision & Mission 2

Core Values 3

Company Information 5

Branch Network 6

Board of Directors 8

Chairman's Message 9

The Executive Team 12

Performance Highlights 14

Samba Financial Group Awards 2018 15

Directors' Report 16

Six Years' Performance Highlights 28

Statement of Internal Controls 29

Complaint Handling Mechanism 30

Auditors' Review Report to the Members on

Code of Corporate Governance 31

Statement of Compliance with the

Code of Corporate Governance 32

Notice of Annual General Meeting 34

Financial Statements 37

Auditors' Report to the Members 38

Statement of Financial Position 42

Profit and Loss Account 43

Statement of Comprehensive Income 44

Cash Flow Statement 45

Statement of Changes in Equity 46

Notes to the Financial Statements 47

Annexure - I 102

Annexure - II 103

Pattern of Shareholding 104

Category of Shareholding 107

Information under Code of

Corporate Governance 108

Proxy Form 109

Admission Slip 113

CONTE

NTS

To be the most admired bank in Pakistan providing world class services and innovative solutions through its people and technology, yielding superior returns and demonstrating responsible corporate citizenship.

To become the most admired bank by:

• Providing world class solutions to our customers by exceeding their service expectations.

• Investing in people by hiring, motivating and retaining best talent.

• Creating sustainable value through growth and efficiency of all stakeholders.

• Delivering superior returns to our investors.

• Benefiting the communities in which we operate.

Vision

Mission

CoreValues

Meritocracy

We believe talent is brought to the fore by advancing individuals not for who they are, but for what they can produce. At Samba, we value the role of each employee from the highest to lowest levels.

Equal Opportunity

At Samba, we ensure all employees get equal opportunity to succeed. We value diversity and ensure fairness for all employees.

Respect & Dignity

At Samba, we respect every individual irrespective of their background and evaluate them on his/her potential and performance. Samba values such individual contributions and encourages employees to excel.

Integrity

At Samba, from top management to junior interns, we demand and maintain highest level of integrity. This is not just something we do, it is what we are.

Teamwork

Samba believes single units when joined with many like itself, combine into a powerful force that can achieve great things. We are encouraged to think as a group and to support each other.

0302

Auditors

Website

Mr. Rashid Jahangir

Chief Financial Officer

Auditors

A. F. Ferguson & Co. Chartered Accountants

Mohsin Tayebaly & Co. Advocates & Legal Consultants

Legal Advisors

Arif Habib Centre Plot No. 23, Ground floor,

M.T. Khan Road Karachi - Pakistan

Head Office

2nd Floor, Building # 13-T, F-7 Markaz, Near Post Mall,

Islamabad – Pakistan

Registered Office

Famco Associates (Pvt.) Limited

8-F, Next to Hotel Faran, Nursery, Block–6 P.E.C.H.S.,

Karachi – Pakistan

* Non-Executive Director w.e.f. Jan’ 24, 2019

** Appointed as Chairman of BNRC w.e.f. Feb’ 20, 2019

*** Resigned as Chairman of BNRC w.e.f. Jan’ 24, 2019

Share Registrar

www.samba.com.pk

(+92-21) 11 11 SAMBA (72622)

Help Line

Medium to Long Term AA (Double A)

Short Term Rating A-1 (A-One)

Credit Rating by JCR-VIS

Dr. Shujaat Nadeem Chairman/Non-Executive Director

Mr. Shahid Sattar President & CEO/Executive Director

Ms. Ranya Nashar Non-Executive Director

Mr. Antoine Mojabber Non-Executive Director

Mr. Beji Tak-Tak Non-Executive Director

Mr. Humayun Murad Independent Director

Mr. Nadeem Babar Independent Director*

Mr. Shahbaz Haider Agha Independent Director

Mr. Arjumand Ahmed Minai Independent Director

Mr. Humayun Murad Chairman

Ms. Ranya Nashar Member

Mr. Arjumand Ahmed Minai Member

Board Audit Committee

Mr. Beji Tak–Tak Chairman

Mr. Shahid Sattar Member

Mr. Antoine Mojabber Member

Mr. Shahbaz Haider Agha Member

Board Risk Committee

Mr. Shahbaz Haider Agha** Chairman

Ms. Ranya Nashar Member

Mr. Nadeem Babar*** Member

Mr. Humayun Murad Member

Board Nomination & Remuneration Committee

Dr. Shujaat Nadeem Chairman

Mr. Antoine Mojabber Member

Mr. Nadeem Babar Member

Board IT Committee

Board of Directors

Company Information

Website

Syed Zia-ul-Husnain Shamsi

Company Secretary

Mr. Shahid Sattar

President & Chief Executive Officer

0504

Currently, SBL has a network of 37 branches located in 10 major cities across the country.

Our Branch Network

KarachiFountain, SaddarRashid MinhasHyderiSMCHSBahria IDHA Phase VIShahra-e-FaisalGulshanCliftonBahadurabadIttehadSaba AvenueTauheed Commercial

LahoreGulbergMallAllama Iqbal Town

Johar TownDHA Phase IIINew Garden TownTufail Sarwar RoadCavalry GroundFaisal TownDHA Phase VBadami Bagh

IslamabadJinnah AvenueF-11F-7DHA Phase II

RawalpindiMurree RoadBahria TownWah Cantt.

GujranwalaG.T. Road

FaisalabadLiaquat Road

MultanNusrat Road

SialkotParis Road

PeshawarIslamia Road

Azad Jammu& KashmirBagh

0706

Chairman’sMessage

Our journey towards meeting our strategic objectives rests on a strong foundation of trust that Samba Bank has earned from its customers and other stakeholders. Our confidence, as we introduce high-quality digital strategies in pursuit of a differentiated customer experience, efficiency and quality earnings growth; is supported by the consistent record of accomplishment of Samba Bank that has always acted with responsibility, transparency and integrity. We are working to instill a culture of excellence across our bank and, at the same time, we are continuously investing in our businesses and people to offer high quality and differentiated service to our customers across all the business segments. We offer our staff and colleagues opportunities to learn and progress. We encourage them to improve, innovate, take ownership of their careers and succeed together.

Corporate and Investment Banking Group I am pleased to report that the Corporate and Investment Banking Group (CIBG) had an outstanding year, growing its customer base and loan book. The focus remains on improving margin with better cross-sell strategy and focus on deepening relationship with our customers. Multiple new cross sell initiatives were launched during the year including Samba Access (Cash Management System) and Call Deposit Receipts (CDRs). These initiatives stimulated the growth in deposits and a wider offering to our client base.

Retail Banking Group In the Retail Banking Group (RBG), we have successfully targeted Priority clients with improved wealth management products and a more focused service offering. As a result, the RBG’s deposit book saw healthy growth as well. More than 5,300 new relationships were added which helped the group to increase its Current Account book by 19% at the year-end with incremental deposit of PKR 4.9Bio. Personal Loan product (PIL), which was launched in 2017, was also a major success in 2018. The newly launched PIL portfolio closed over PKR 1Bio with a high quality portfolio. Considering the increased customer base and success of PIL initiative, the Auto Loan product was also launched in 2018. Both these products would help in further strengthening the RBG’s product offering to its retail clientele.

Global Markets

The Global Markets (GM) continued to support customer business groups’ liquidity requirements efficiently. During the year, the Pakistani Rupee underwent significant devaluation, core interest rate increased by 425bps and capital markets remained volatile. Global Markets capitalized on this volatility in the markets and delivered strong financial performance. The Margin Trading Product was amongst the new initiatives introduced by the business during the year and has already seen good traction and contribution to the bottom line of the bank

Commercial Banking Group and SME BankingThe Commercial Banking Group maintained its focus to grow its business and delivered positive results. The Commercial Banking Group was launched in late 2015 and its focus has been to serve commercial and medium-sized corporates.

In 2017, the SME banking proposition was launched to cater for financial needs of small & medium enterprises while complying with all regulatory requirements. Observing great potential in this segment, the Bank has developed a focused strategy to increase its standing in this market.

Information TechnologyFollowing the successful implementation of Temenos - T24 and allied systems, we have continued to make investments in the technology platform by launching the Samba-Smart Mobile Banking application, providing features beyond traditional functionalities to better respond to customers’ needs as they choose to manage their finances in new and different ways. We now have capability to deliver fast-to-market solutions and have a solid foundation for further development of customer experience and improving our solutions. This is an essential tool for the development of our digital services, anticipating the changing needs of customers in an increasingly connected world. The integration of Oracle Financials with core banking system (T-24) was another milestone for the bank.

Corporate Social ResponsibilityWe strive to operate as a responsible and sustainable company, collaborating with partners to promote social and economic development. Samba Bank manages business with its stakeholders in a manner that is ethically acceptable and beneficial for all. The bank holds an approved Corporate Social Responsibility (CSR) Policy to cover the core areas of focus on CSR. During 2018, the Bank continued to contribute towards education, health, environment, sports and awareness. Samba Bank in collaboration with World Wildlife Fund sponsored their plantation program named “Rung Do Pakistan”, and has donated 10,000 plants that will be planted across Pakistan covering different geographical locations.

Performance of the Board of DirectorsI take this opportunity to recognize the contribution of the Board of Directors to Samba Bank’s progress and continued success. During the year, the performance of Board of Directors exhibited high standards of business and professional conduct in managing and supervising the affairs of the Bank. The Board set the Bank’s strategic aims and provided the leadership to put them into effect, upholding the vision, mission and core values of the Bank. It also monitored the Bank’s financial and operational soundness, governance structure, the effectiveness of internal controls & audit functions and risk management framework.

AcknowledgementOn behalf of the Board of Directors, it is my pleasure to express my sincere appreciation to our customers and shareholders for their loyalty and continued support, the entire management team at Samba Bank for its continued dedication and service during the year, and to our staff for their wholehearted efforts. The achievements and the solid progress we have made in our journey could not have been realized without their dedication and loyalty. I look forward to a new year of challenges and opportunities, and hope you will join me in taking Samba Bank to even greater heights of success.

Dr. Shujaat NadeemChairman

I am pleased to report that Samba Bank had another good year. Our key investment areas are growing well and we are encouraged by the results. Of course, we have a long way to go. We are working hard to establish income growth momentum across all our businesses. In this report, we describe our progress in realizing our goals and strategic objectives as we continue to strengthen our business proposition, and get closer to our customers. Our new business initiatives spanning commercial & SME banking, personal & auto loans, and Samba Gold are making positive contribution. Consequently, the bank has posted a record, all-time high, annual profit before tax (PBT) of PKR 1,110Mio which is 19.21% higher than previous year. At close of 2018, the total assets of the bank stood at PKR 122.8Bio; an increase of around 4% over last year.

09

Board of Directors

Mr. Shahid SattarMs. Ranya Nashar

Mr. Beji Tak-Tak

Mr. Nadeem BabarMr. Antoine Majobber

Dr. Shujaat Nadeem

Mr. Humayun Murad

Mr. Shahbaz Haider Agha

Mr. Arjumand Ahmed Minai

08

10 11

Our journey towards meeting our strategic objectives rests on a strong foundation of trust that Samba Bank has earned from its customers and other stakeholders. Our confidence, as we introduce high-quality digital strategies in pursuit of a differentiated customer experience, efficiency and quality earnings growth; is supported by the consistent record of accomplishment of Samba Bank that has always acted with responsibility, transparency and integrity. We are working to instill a culture of excellence across our bank and, at the same time, we are continuously investing in our businesses and people to offer high quality and differentiated service to our customers across all the business segments. We offer our staff and colleagues opportunities to learn and progress. We encourage them to improve, innovate, take ownership of their careers and succeed together.

Corporate and Investment Banking Group I am pleased to report that the Corporate and Investment Banking Group (CIBG) had an outstanding year, growing its customer base and loan book. The focus remains on improving margin with better cross-sell strategy and focus on deepening relationship with our customers. Multiple new cross sell initiatives were launched during the year including Samba Access (Cash Management System) and Call Deposit Receipts (CDRs). These initiatives stimulated the growth in deposits and a wider offering to our client base.

Retail Banking Group In the Retail Banking Group (RBG), we have successfully targeted Priority clients with improved wealth management products and a more focused service offering. As a result, the RBG’s deposit book saw healthy growth as well. More than 5,300 new relationships were added which helped the group to increase its Current Account book by 19% at the year-end with incremental deposit of PKR 4.9Bio. Personal Loan product (PIL), which was launched in 2017, was also a major success in 2018. The newly launched PIL portfolio closed over PKR 1Bio with a high quality portfolio. Considering the increased customer base and success of PIL initiative, the Auto Loan product was also launched in 2018. Both these products would help in further strengthening the RBG’s product offering to its retail clientele.

Global Markets

The Global Markets (GM) continued to support customer business groups’ liquidity requirements efficiently. During the year, the Pakistani Rupee underwent significant devaluation, core interest rate increased by 425bps and capital markets remained volatile. Global Markets capitalized on this volatility in the markets and delivered strong financial performance. The Margin Trading Product was amongst the new initiatives introduced by the business during the year and has already seen good traction and contribution to the bottom line of the bank

Commercial Banking Group and SME BankingThe Commercial Banking Group maintained its focus to grow its business and delivered positive results. The Commercial Banking Group was launched in late 2015 and its focus has been to serve commercial and medium-sized corporates.

In 2017, the SME banking proposition was launched to cater for financial needs of small & medium enterprises while complying with all regulatory requirements. Observing great potential in this segment, the Bank has developed a focused strategy to increase its standing in this market.

Information TechnologyFollowing the successful implementation of Temenos - T24 and allied systems, we have continued to make investments in the technology platform by launching the Samba-Smart Mobile Banking application, providing features beyond traditional functionalities to better respond to customers’ needs as they choose to manage their finances in new and different ways. We now have capability to deliver fast-to-market solutions and have a solid foundation for further development of customer experience and improving our solutions. This is an essential tool for the development of our digital services, anticipating the changing needs of customers in an increasingly connected world. The integration of Oracle Financials with core banking system (T-24) was another milestone for the bank.

Corporate Social ResponsibilityWe strive to operate as a responsible and sustainable company, collaborating with partners to promote social and economic development. Samba Bank manages business with its stakeholders in a manner that is ethically acceptable and beneficial for all. The bank holds an approved Corporate Social Responsibility (CSR) Policy to cover the core areas of focus on CSR. During 2018, the Bank continued to contribute towards education, health, environment, sports and awareness. Samba Bank in collaboration with World Wildlife Fund sponsored their plantation program named “Rung Do Pakistan”, and has donated 10,000 plants that will be planted across Pakistan covering different geographical locations.

Performance of the Board of DirectorsI take this opportunity to recognize the contribution of the Board of Directors to Samba Bank’s progress and continued success. During the year, the performance of Board of Directors exhibited high standards of business and professional conduct in managing and supervising the affairs of the Bank. The Board set the Bank’s strategic aims and provided the leadership to put them into effect, upholding the vision, mission and core values of the Bank. It also monitored the Bank’s financial and operational soundness, governance structure, the effectiveness of internal controls & audit functions and risk management framework.

AcknowledgementOn behalf of the Board of Directors, it is my pleasure to express my sincere appreciation to our customers and shareholders for their loyalty and continued support, the entire management team at Samba Bank for its continued dedication and service during the year, and to our staff for their wholehearted efforts. The achievements and the solid progress we have made in our journey could not have been realized without their dedication and loyalty. I look forward to a new year of challenges and opportunities, and hope you will join me in taking Samba Bank to even greater heights of success.


I am pleased to report that Samba Bank had another good year. Our key investment areas are growing well and we are encouraged by the results. Of course, we have a long way to go. We are working hard to establish income growth momentum across all our businesses. In this report, we describe our progress in realizing our goals and strategic objectives as we continue to strengthen our business proposition, and get closer to our customers. Our new business initiatives spanning commercial & SME banking, personal & auto loans, and Samba Gold are making positive contribution. Consequently, the bank has posted a record, all-time high, annual profit before tax (PBT) of PKR 1,110Mio which is 19.21% higher than previous year. At close of 2018, the total assets of the bank stood at PKR 122.8Bio; an increase of around 4% over last year.

The Executive Team

Humayun M. BawkherZeeshan KayserSyed Zia ul Husnain Shamsi

Rashid JahangirAbid Husain

Chief Credit Officer

Chief Technology Officer

Group Head, Legal Affairs, IRMand Company Secretary

Chief Financial Officer

Group Head Operations

Down Left to Right

Muhammad Arshad MehmoodArif RazaTalal JavedShahid SattarSamina Hamid KhanSyed Ghazanfar Agha

Group Head Human Resources & Training

Group Head Global Market (Treasurer)

Group Head Consumer Banking

President & CEO

Chief Risk Officer

Group Head, Corporate & Investment Banking

Group Head Compliance

Group Head, Commercial Bankingand Administration

Chief Internal Auditor

Syed Amir Raza ZaidiAhmad Tariq Azam

Sitwat Rasool Qadri

Top Left to Right

14 15

Performance Highlights Samba Financial Group Awards 2018

Global Finance

• Best Foreign Exchange Provider in Saudi Arabia (10th year)

• Best Bank for Payments and Collections in the world for the first year and Best Bank for Payments and Collections in the Middle East (4th year in a row)

• Best Bank in Saudi Arabia (13th year in a row)• Best Online Cash Management in Saudi Arabia• Best Trade Finance Services in Saudi Arabia• Best Web Design in Saudi Arabia• Best Integrated consumer Banking Site in Saudi

Arabia• Best SMS/Text Banking in Saudi Arabia

Banker Middle East

• Best IT Risk Management KSA• Best IT Solutions KSA

The Banker Middle East (Top 100 Middle East Bank Rankings)

• Rank: 6th

Institute of Public Administration

• Best National Institution for Employment of Saudis Employees (10th year)

The Banker (Top 1000 World Bank Rankings)

• World Rank: 124 (119 Last Year) - Middle East Rank: 6th (6th Last Year)

World Union of Arab Bankers

• Best Arabian Bank for the year 2018.

The Asian Banker

• Strongest Bank in Saudi Arabia for the year 2018.• The Best Commercial Bank in Saudi Arabia

(The Global Wealth and Society awards)

MEED

• Best Bank/Financial Institution of the Year in the GCC

Total Number of Awards & Recognitions: 17

2008 2009 2010 201 1 201 2 201 3 201 4 201 7 201 8201 6201 5

Rupees in billion

2008 2009 2010 201 1 201 2 201 3 201 4 201 7 201 8201 5 201 6

54.9

40.240.2

28.850.3

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Advances Investments Placements Cash & bank balances Other assets

2013

2014

2015

2016

2017

2018

10%0%

2013

2014

2015

2016

2017

20% 30% 40% 50% 60% 70% 80% 90% 100%

Deposits Borrowings Bills payable Other liabilities Equity & Reserves

2018

65.2

21.0

� CA

GR

53.6

23

.2 � C

AG

R

2015 2016 201820142013

44%39% 8% 5% 4%

2017Assets: Advances 46% 43% 30% 28% 34% Investments 35% 39% 56% 56% 54%Placements 2% 4% 2% 5% 4%Cash & bank balances 7% 5% 5% 5% 3%Other assets 10% 9% 7% 6% 5%

53%32% 1% 3% 11%

Liabilities & Equity: Deposits 62% 63% 48% 49% 47%Borrowings 7% 12% 34% 35% 39%Bills payable 2% 1% 1% 1% 1% Other liabilities 3% 3% 2% 3% 2%Equity & Reserves 26% 21% 15% 12% 11%

16 17

Directors’ Report

On behalf of the Board of Directors, we are pleased to present the annual report of the Bank along with its audited

financial statements and auditors’ report for the year ended December 31, 2018.

Economic Highlights

Pakistan’s economy witnessed a decent growth in the last three years supported by the favorable global

economic environment, CPEC related investment activity, and expansionary fiscal and monetary policies.

However, the momentum was slowed down due to heightened external imbalances. PKR witnessed a 26%

devaluation in CY2018. With the objective to curtail domestic demand pressure, the central bank cumulatively

raised interest rates by 425bps in CY2018, with majority of increase happening in the latter half of the year.

Bank’s Operating Results and Financial Review

In terms of financial performance, 2018 has remained another successful year for the bank. The bank posted a

record annual profit before tax (PBT) of PKR 1,110mln which is 19.21% higher than previous year. At close of 2018,

the total assets of the bank stood at PKR 122.76bln with an increase of 4% over last year. Mark-up income of the

bank increased by 4% from last year and closed at PKR 7,556mln. The strong topline earnings were backed by

healthy increase in earning assets of the bank. Gross Loans & advances portfolio was increased by 33% from last

year and closed at PKR 53,592mln. Deposits were also increased by 19% from last year. During the year

management’s focus remained on attracting low and no cost deposits and improved the overall mix. The current

account portfolio of the bank increased by 32% during the year. The bank has also managed to book a healthy

non mark-up income of PKR 767mln which is higher by 7% from last year.

In order to safeguard its assets against credit risk, the Bank has adopted a prudent approach and has charged

specific provision of PKR 239mln on both subjective and objective basis. In addition, the Bank has also charged a

general provision of PKR 33.45mln against its performing consumer loans. The Bank also managed to recover

PKR 289mln against the portfolio classified under non-performing status, demonstrating consistent and effective

remedial management.

With the introduction of new consumer products, performing various software upgrades & IT Infrastructure

security hardening and launching the Samba-Smart Mobile Banking application, the overall administrative cost of

the bank increased by only 12%.

New developments during the year

With the stabilization of Temenos-T24 and allied systems, SBL achieved another milestone in digital banking by

launching the Samba-Smart Mobile Banking application, providing features beyond traditional functionalities and

a few firsts for domestic market. Various software upgrades including integration of Oracle Financials with

Temenos-T24 and IT Infrastructure security hardening were performed in 2018. Samba Access and integrated

Cash Management solution was also introduced to facilitate banking needs of corporate and retail clients.

Projects for Digital Account on-boarding and ADC Switch & Cards System replacement through leveraging on new

technologies were also initiated during the year.

Considering the increased customer base and success of PIL initiative, the Auto Loan product was also launched

in 2018. Both these products would help in further strengthening the Retail Banking Group’s product offering to

its retail clientele.

Credit Rating

JCR-VIS, a premier credit rating agency, has reaffirmed SBL’s medium to long-term credit rating at AA (Double A)

and the short-term rating at A-1 (A-One). The outlook on the assigned ratings has also been regarded as ‘Stable’.

These short term and long term ratings of the Bank denote high credit quality with adequate protection factor

and strong capability for timely payments to all financial commitments owing to strong liquidity positions.

Statement of Internal Controls

The Board is pleased to endorse the management’s statement on the evaluation of internal controls which is

included in the annual report.

Risk Management Framework

Effective risk management is a prerequisite for achieving our business objectives and is thus a central part of the

Bank’s policies. To ensure that an effective risk management framework is implemented in the Bank, the Board of

Directors and senior management are actively involved in the formulation of policies, procedures and limits.

Accordingly, the Bank has a comprehensive risk management framework that establishes risk management

principles, guidelines and the governance structure. This framework defines the various committees established

Net mark-up / return / interest income after provisions 2,642 2,260

Non mark-up / interest income 767 715

Non mark-up / interest expenses 2,299 2,044

Profit before taxation 1,110 931

Taxation charge 427 192

Profit after taxation 683 739

Earnings per share – PKR 0.68 0.73

(Rupees in million)

20172018

18 19

to undertake effective risk monitoring by the Board of Directors and senior management, of the various types of

risks which include credit, market, operational and liquidity risks. These are discussed in more detail in note 42 to

the annexed financial statements.

Through the risk management framework, bank-wide risks are managed, with the objective of maximizing the

risk-adjusted returns while remaining within the risk parameters approved by the Board. The Bank’s risk

management framework is designed to balance corporate governance with well-defined independent risk

management principles. Refinements were continuously undertaken in the overall risk management governance

throughout 2018, based on the guiding principles established by the Board Risk Committee.

Statement under Code of Corporate Governance / Corporate and Financial Reporting Framework

The Board of Directors is aware of its responsibilities under the Code of Corporate Governance and is pleased to

report and certify that:

• The Bank is a subsidiary of SAMBA Financial Group of Saudi Arabia, which holds 84.51% shares of the Bank

as at December 31, 2018 (2017: 84.51%);

• Proper books of account of the Bank have been maintained;

• The financial statements prepared by the management of the Bank fairly present its state of affairs, result of

its operations, comprehensive income, cash flows, and changes in equity;

• Appropriate accounting policies have been consistently applied in the preparation of financial statements

except for changes in accounting policies disclosed in Note 5.1 of the annexed financial statements.

Accounting estimates are based on reasonable and prudent judgment;

• International Financial Reporting Standards, as applicable in Pakistan and adopted by the State Bank of

Pakistan, have been followed in preparation of the Bank’s financial statements, and departures, if any, have

been adequately disclosed;

• The system of internal controls is sound in design and has been effectively implemented and monitored on

best efforts basis;

• There are no doubts about the Bank’s ability to continue as a going concern;

• There has been no material departure from the best practices of corporate governance, as detailed in the

listing regulations;

• A summary of key operating & financial data for last 6 years is included in Annual Report;

• In order to strengthen the equity base for future expansion; the Bank has not declared dividend. Earnings Per

Share (EPS) for the year under review is PKR 0.68 (basic / diluted);

• A statement showing the Bank’s shareholding pattern as of December 31, 2018 is annexed;

• The book value of investments of Staff Provident Fund is PKR 238mln as per the audited financial statements for the period ended December 31, 2017;

• There are no statutory payments on account of taxes, duties, levies and charges which are outstanding as of December 31, 2018, except as disclosed in these financial statements;

• Statement of Compliance with Code of Corporate Governance is annexed;

• The financial statements of the Bank have been audited without qualification by auditors of the Bank, Messrs A.F. Ferguson & Company, Chartered Accountants;

• All the directors of the Bank, have completed their training program as per the requirements of the Code;

• Directors Fee is paid in line with Board & shareholders’ approval and the Bank is in the process of finalising a formal policy in this regard in accordance with the Companies Act, 2017 and the Code of Corporate Governance (CCG);

• In line with the requirements of the CCG, the Bank encourages representation of independent and non-executive directors, currently Board of Directors of the Bank comprise of four independent directors, four non-executive directors and one executive director. The Bank has eight males and one female director on its Board which evidence the gender diversity; and

• The Board evaluates its performance by the overall performance of the Bank. The Directors regularly attend the Board meetings and actively participate in the proceedings. The Board ensures that the Bank adopt the best practices of corporate governance in all areas of its operations and has a robust internal control system. The Board is fully cognizant of the Bank’s commitment to its sustainability strategy based on social, environmental factors and has issued appropriate policy guidelines to ensure continued performance in these areas.

Meetings of the Board

Four (4) Board meetings along with Eleven (11) Board Sub-Committee meetings were held during the period under review. The Board granted leave of absence to the Directors who did not attend the meetings. The number of meetings held and attended by each director is:

Number of meetings held 4 4 4 3 -

Number of meetings attended

Dr. Shujaat Nadeem 4 - - - -

Ms. Ranya Nashar 3 3 - 3 -

Mr. Antoine Mojabber 4 - 4 - -

Mr. Beji Tak-Tak 4 - 4 - -

Mr. Humayun Murad 4 4 - 3 -

Mr. Nadeem Babar 4 - - 3 -

Mr. Shahbaz Haider Agha 4 - 4 - -

Mr. Arjumand Ahmed Minai 4 4 - - -

Mr. Shahid Sattar 4 - 4 - -

BoardMeetings

Audit CommitteeMeetings

Risk CommitteeMeetings

Nomination &Remuneration

CommitteeMeetings

IT CommitteeMeetings

20 21

Share Acquisition by Directors and Executives

The Pattern of shareholding and additional information regarding pattern of shareholding is annexed separately.

During the year, no trade in the shares of the Bank was carried out by the Directors, CFO and Company Secretary

and their spouses and minor children, except, Mr. Shahid Sattar, who sold 133,500 shares, after meeting all

regulatory and disclosure requirements.

Corporate Social Responsibility

Corporate Social Responsibility (CSR) refers to a business practice that involves participating or taking initiatives

that benefits the social ecosystem in which an organization operates. When a business operates in an

environmentally, socially and economically responsible / transparent manner, it helps the organization succeed.

The Bank, being aware of its responsibilities toward the society as whole has taken initiatives to contribute

towards the society. A specific budget was allocated towards CSR and related activities in 2018 which was utilized

in form of contribution to some of the well-deserved organizations, engaged in philanthropic, education, health

and development activities for the betterment of the Pakistani Society at large. The details of donations /

contributions made during the year have been disclosed in Note 27.2 of the annexed financial statements.

Auditors

The retiring external auditors Messrs A.F. Ferguson & Company, Chartered Accountants, being eligible, have

offered themselves for re-appointment. The Board of Directors, on the suggestion of the Audit Committee,

recommends Messrs A.F. Ferguson & Company, Chartered Accountants (a member firm of

PricewaterhouseCoopers) to be appointed for the next year.

Events after the Balance Sheet Date

There have been no material events that occurred subsequent to the date of the Balance Sheet that require

adjustments to the financial statements. Details of non-adjusting events after the reporting date have been

disclosed in Note 44 of the annexed financial statements.

Future Outlook

The stabilization measures taken during the last few months have put economy on the track of recovery. Monthly

indicators are showing visible signs of deceleration in domestic demand. The current account deficit is narrowing

gradually along with increase in financial inflows from friendly countries. Drop in crude oil prices in the last two

months is a major positive for the economy as it will lower the import bill in the coming quarters. Low oil prices

are not only positive from the external account perspective, but this will also help limit the impact on inflation and

interest rates. It is expected that government will capitalize on the opportunity provided by the low oil prices

environment to undertake long due key structural reforms. If done successfully, this would result in high &

self-sustaining economic growth and durable financial stability.

The economic conditions particularly for the banking industry will remain challenging during 2019 in Pakistan.

However, the management’s focus shall continue to rightly position itself in the market and will live up to maintain

the brand image of SAMBA as a symbol of customer confidence, loyalty and enhanced service quality.

With a view to the above forecasts, the Bank continues to foresee effective measures for its growth keeping its

core focus to leverage on the building blocks put into place; steadily build up its earning assets; effectively

manage the associated risks; and reduce its cost of funds through continued improvement in its deposit mix. This

would be facilitated by delivery of world class banking services to the Bank’s valued customers.

Acknowledgement

We wish to express sincere gratitude to our customers, business partners and shareholders for their patronage

and trust. The Board of Directors and the management would like to thank the State Bank of Pakistan and other

regulatory bodies for their guidance and support. We also sincerely appreciate the dedication, commitment and

team work of all employees of the Bank who worked very hard to transform the Bank into a successful franchise.

On behalf of the Board of Directors,

Shahid Sattar

President and Chief Executive Officer

February 20, 2019

Karachi

Arjumand Ahmed Minai

Director

28 29

2018 2017 2016 2015 2014 2013

Statement of Financial Position

Assets

Advances - gross 55,892 42,503 30,988 26,260 23,916 20,561

Investments - gross 48,139 62,936 57,272 44,828 20,055 14,104

Lending to financial institutions 9,449 5,193 5,277 2,000 1,900 791

Cash and balances with treasury and other banks 5,651 4,015 5,540 4,330 2,605 2,913

Fixed assets 1,065 1,113 1,290 1,269 759 839

Intangible assets 121 133 169 54 42 23

Deferred tax asset - net 701 437 410 658 1,058 1,484

Other assets - gross 4,338 4,406 4,562 3,118 2,567 1,810

Total assets - gross of provisions 125,355 120,736 105,507 82,517 52,903 42,525

Provision against advances - specific and general (2,300) (2,321) (2,198) (2,073) (2,104) (2,292)

Provision for diminution in the value of investments (118) (18) (35) (102) (102) (113)

Provision held against bad and doubtful other assets (173) (173) (175) (176) (115) (119)

Total assets - net of provisions 122,765 118,224 103,100 80,166 50,581 40,001

Liabilities

Customer deposits and other accounts 65,225 54,901 50,307 38,844 31,642 24,633

Borrowings 39,781 46,201 35,847 27,326 5,965 2,987

Bills payable 877 687 915 492 309 919

Other liabilities 4,098 3,726 3,711 1,660 1,411 1,331

Total liabilities 109,981 105,515 90,780 68,322 39,326 29,870

Net assets 12,784 12,708 12,320 11,844 11,255 10,131

Share capital 10,082 10,082 10,082 10,082 10,082 8,082

Advance against proposed issue of shares - - - - - 1,614

Reserves 692 555 408 299 213 167

Unappropriated profit / (accumulated losses) 2,389 1,843 1,252 816 472 291

Equity 13,164 12,481 11,743 11,198 10,767 10,154

(Deficit)/ surplus on revaluation of assets - net of tax (380) 227 577 647 488 (23)

12,784 12,708 12,320 11,844 11,255 10,131

Profit & Loss Account

Mark-up / return / interest earned 7,556 7,256 5,682 5,468 4,619 3,207

Mark-up / rerurn / interest expensed (4,847) (4,897) (3,576) (3,326) (2,806) (1,823)

Net mark-up / interest income 2,708 2,359 2,106 2,143 1,813 1,384

Fee, commission, brokerage and Income from dealing in foreign currencies 503 349 317 201 153 152

Dividend income and (loss) / gain on sales of securities - net 258 139 739 507 41 -

Other income and unrealised (loss) / gain on revaluation of investments 5 227 23 98 24 8

Non mark-up / interest income 767 715 1,079 805 217 160

Revenue 3,475 3,074 3,185 2,948 2,030 1,544

Non mark-up / interest expenses (2,297) (2,042) (1,993) (2,111) (1,646) (1,551)

(Charge) / reversal / recovery of provision / against write-offs (68) (101) (265) (22) 41 88

Profit / (Loss) before taxation 1,110 931 926 815 425 81

Taxation (427) (192) (382) (385) (199) 3

Profit / (Loss) after taxation 683 739 545 431 226 84

Other Information

Return on equity (RoE)* 5.4% 5.9% 4.4% 3.7% 2.1% 0.9%

Return on assets (RoA)* 0.6% 0.6% 0.6% 0.6% 0.5% 0.2%

Profit before tax to revenue ratio 31.9% 30.3% 29.1% 27.7% 20.9% 5.2%

Advances to deposits ratio (ADR) 82.2% 73.2% 57.2% 62.3% 68.9% 74.2%

Efficiency ratio (cost to revenue) 66.1% 66.5% 62.6% 71.6% 81.1% 100.4%

Earning Per Share (EPS) 0.68 0.73 0.54 0.43 0.24 0.10

Market value per share - rupees 8.04 6.96 7.26 6.00 7.00 4.72

Number of employees 837 747 680 657 602 614

Number of branches 37 37 37 34 28 28

* These ratios are based on average volume of respective years.

Six Years' Performance HighlightsRs. in Millions

Statement of Internal Controls

Management is responsible for establishing and maintaining adequate controls for providing reasonable

assurance on effective and efficient operations, internal financial controls and compliance with laws and

regulations. Furthermore, development of internal control systems is an ongoing process. Internal controls are

designed to manage, rather than eliminate, the risk of failure to achieve business objectives, and can only provide

reasonable, and not absolute, assurance against material misstatement or loss.

The responsibility for adherence to controls mainly lies with the business from where the risk arises. For

monitoring the effectiveness of internal control systems, the Bank has set roles for certain functions such as

Audit & Risk Review (ARR), Compliance and the Operations Risk Management Department (ORMD). ARR

periodically carries out audits of branches and departments to monitor compliance with the Bank's control and

processing standards, and regulatory requirements. Likewise, Compliance department is responsible for assisting

the senior management in managing effectively the regulatory compliance and Money Laundering & Terrorist

Financing risks faced by the Bank. Also, the ORMD function within the Risk Management Group carries out quality

assurance reviews of processes and transactions of branch banking operations, to ensure compliance of policies

and fulfillment of regulatory requirements. In order to institutionalize a robust control and risk management

culture, Key Risk Indicators (KRIs) for respective control areas have been identified along with tolerance limits.

Further, the Bank's KRI inventory is regularly updated to reflect latest trends with breaches being promptly

reported to senior management. Also, a Risk and Controls Self-Assessment (RCSA) regime has been implemented

throughout the Bank. An accountability process is in place to ensure effectiveness of the overall control

environment. Further, management gives due consideration to recommendations made by internal and external

auditors and regulators, especially for improvements in internal control systems and processes, and takes timely

action to implement their recommendations.

To implement Internal Control Guidelines, as required by State Bank of Pakistan, Internal Audit Department

reviewed the detailed exercise of documenting and benchmarking existing internal processes and controls,

relating to financial reporting on the basis of international standards. This project assists in further improving

internal controls across the Bank and ensures compliance with the SBP requirements. As per the SBP roadmap,

the Bank had completed all stages and is in compliance with SBP instructions and obtained exemption from the

State Bank of Pakistan for submission of Long Form Report (LFR) certified by external auditors. Bank has made

efforts to comply with the prerequisites of ICFR through submission of Internal Audit Annual Assessment Report

of 2017 to SBP after sign off from Board’s Audit Committee.

The Board of Directors is ultimately responsible for the internal control system and endorses the above evaluation

by management.

Shahid Sattar

President and Chief Executive Officer

February 20, 2019

Karachi

(Restated) (Restated)

30 31

Complaint Handling Mechanism

Samba Bank Limited (SBL) continued to place primary focus on providing its customers with world class banking

solutions with the objective of making its customer experience synonymous with “ease and convenience”.

As part of this effort, the Bank launched Samba Smart Application in 2018. This is a mobile banking application

which allows customers to transfer funds, pay bills and handle many other banking services from the comfort of

their mobile phones. Samba Smart Application can be used by both customers and non-customers and also

includes a Financial ChatBot which users can interact with to perform account related transactions.

The Bank also connected with Keenu network as part of its efforts to strengthen its digital payments solutions,

thus connecting us with its 50+ merchant network.

Samba Bank Limited updated its Financial Consumer Protection Framework in order to build the customer’s

confidence in our products and services. We aim to treat our customers fairly and equitably without any

discrimination in provision of banking services. The framework strives to create awareness about consumer rights

and obligations while using the banks product and services.

Complaint Summary

In 2017, the total complaints received were 1240 where the average resolution time was 4 working days.

Encouragingly, the year 2018 saw the Bank’s average complaints’ resolution turnaround fall to 3 working days

with 1632 complaints being logged.

Independent Auditor’s Review Report to The members on The Statement of Compliance with The Code of Corporate Governance

We have reviewed the enclosed Statement of Compliance with the Listed Companies (Code of Corporate

Governance) Regulations, 2017 (the Regulations) prepared by the Board of Directors of Samba Bank Limited (the

Bank) for the year ended December 31, 2018 in accordance with the requirements of regulation 40 of the

Regulations.

The responsibility for compliance with the Regulations is that of the Board of Directors of the Bank. Our

responsibility is to review whether the Statement of Compliance reflects the status of the Bank’s compliance with

the provisions of the Regulations and report if it does not and to highlight any non-compliance with the

requirements of the Regulations. A review is limited primarily to inquiries of the Bank’s personnel and review of

various documents prepared by the Bank to comply with the Regulations.

As a part of our audit of the financial statements we are required to obtain an understanding of the accounting

and internal control systems sufficient to plan the audit and develop an effective audit approach. We are not

required to consider whether the Board of Directors’ statement on internal control covers all risks and controls or

to form an opinion on the effectiveness of such internal controls, the Bank’s corporate governance procedures

and risks.

The Regulations require the Bank to place before the Audit Committee, and upon recommendation of the Audit

Committee, place before the Board of Directors for their review and approval, its related party transactions and

also ensure compliance with the requirements of section 208 of the Companies Act, 2017. We are only required

and have ensured compliance of this requirement to the extent of the approval of the related party transactions

by the Board of Directors upon recommendation of the Audit Committee. We have not carried out procedures to

assess and determine the Bank’s process for identification of related parties and that whether the related party

transactions were undertaken at arm’s length price or not.

Based on our review, nothing has come to our attention which causes us to believe that the Statement of

Compliance does not appropriately reflect the Bank's compliance, in all material respects, with the requirements

contained in the Regulations as applicable to the Bank for the year ended December 31, 2018.

A. F. Ferguson & Co.

Chartered Accountants

Dated: February 28, 2019

Karachi

32 33

Statement of Compliance with the Code of Corporate Governance For the Year Ended December 31, 2018Samba Bank Limited (the Bank) has complied with the requirements of the Listed Companies (Code of Corporate Governance) Regulations, 2017 (the Regulations) in the following manner:

1. The total number of directors are 9 as per the following:a. Male: 8b. Female: 1

2. The Composition of Board is as follows:

Category Names

Independent Directors Mr. Humayun Murad Mr. Nadeem Babar Mr. Shahbaz Haider Agha Mr. Arjumand Ahmed Minai

Executive Director Mr. Shahid Sattar [President and Chief Executive Officer (CEO)] Non-Executive Directors Dr. Shujaat Nadeem (Chairman) Mr. Antoine Mojabber Mr. Beji Tak-Tak Ms. Ranya Nashar

3. The directors have confirmed that none of them is serving as a director on more than five listed companies, including this Bank (excluding the listed subsidiaries of listed holding companies, where applicable).

4. The Bank has prepared a Code of Conduct and has ensured that appropriate steps have been taken to disseminate it throughout the Bank along with its supporting policies and procedures.

5. The Board has developed a vision / mission statement, overall corporate strategy and significant policies of the Bank. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained.

6. All the powers of the Board have been duly exercised and decisions on relevant matters have been taken by the Board / shareholders as empowered by the relevant provisions of the Companies Act, 2017 (the Act) and these Regulations.

7. The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the Board for this purpose. The Board has complied with the requirements of the Act and the Regulations with respect to frequency, recording and circulating minutes of meeting of the Board.

8. The Board of directors have a formal policy and transparent procedures for remuneration of directors in accordance with the Act and these Regulations.

9. The Board has arranged Director’s training program for the following:

a. Dr. Shujaat Nadeemb. Mr. Antoine Mojabberc. Mr. Beji Tak-Takd. Ms. Ranya Nashare. Mr. Humayun Muradf. Mr. Nadeem Babar

g. Mr. Shahbaz Haider Aghah. Mr. Shahid Sattar

10. The Board has approved appointment of Chief Financial Officer (CFO), Company Secretary and Head of Internal Audit, including their remuneration and terms and conditions of employment and complied with relevant requirements of the Regulations.

11. CFO and CEO duly endorsed the financial statements before approval of the Board.

12. The Board has formed committees comprising of members given below:

a. Audit Committee(i) Mr. Humayun Murad (Chairman)(ii) Ms. Ranya Nashar (Member) (iii) Mr. Arjumand Ahmed Minai (Member)

b. Board Nomination and Remuneration Committee(i) Mr. Nadeem Babar (Chairman)(ii) Ms. Ranya Nashar (Member) (iii) Mr. Humayun Murad (Member)

c. Board Risk Management Committee(i) Mr. Beji Tak-Tak (Chairman)(ii) Mr. Shahid Sattar (Member)(iii) Mr. Antoine Mojabber (Member)(iv) Mr. Shahbaz Haider Agha (Member)

13. The terms of reference of the aforesaid committees have been formed, documented and advised to the committee for compliance.

14. The frequency of meetings of the aforesaid committees were as per following:

a. Audit Committee: 4 meetings were held during the financial year ended December 31, 2018

b. Board Nomination and Remuneration Committee: 3 meetings were held during the financial year ended December 31, 2018

c. Board Risk Management Committee: 4 meetings were held during the financial year ended December 31, 2018

15. The Board has set up an effective internal audit function within the Bank. The staff is suitably qualified and experienced for the purpose and is conversant with the policies and procedures of the Bank.

16. The statutory auditors of the Bank have confirmed that they have been given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistan (ICAP) and registered with Audit Oversight Board of Pakistan, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the Bank and that the firm and all its Partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP.

17. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the Act, these regulations or any other regulatory requirement and the auditors have confirmed that they have observed IFAC guidelines in this regard.

18. We confirm that all other requirements of the Regulations have been complied with.


Dated: February 20, 2019

34 35

Notice of the Sixteenth Annual General MeetingNotice is hereby given that the Sixteenth Annual General Meeting of Samba Bank limited (“the Bank”) will be held at 10:00 a.m. on Wednesday, the March 27, 2019, at Hotel Serena, Islamabad, to transact the following business:

Ordinary Business

1. To confirm the minutes of the 15th Annual General Meeting held on March 27, 2018.

2. To receive, consider and adopt the Audited Annual Accounts of the Bank for the year ended December 31, 2018, together with the Reports of the Directors and Auditors thereon.

3. To appoint Auditors’ and to fix their remuneration. M/s A. F. Ferguson & Company, Chartered Accountants have offered themselves for a term ending at the conclusion of the next Annual General Meeting. The retiring Auditors, being eligible for reappointment.

4. To elect eight Directors of the Bank, as fixed by the Board under the provisions of section 159 of the Companies Act, 2017 for a period of 3 years commencing from March 27, 2019.

The names of the retiring Directors are:

I. Mr. Antoine Mojabber II. Mr. Arjumand Ahmed Minai III. Mr. Beji Tak-Tak IV. Mr. Humayun Murad V. Mr. Nadeem Babar VI. Ms. Ranya Nashar VII. Mr. Shahbaz Haider Agha VIII. Dr. Shujaat Nadeem

Any Other Business

To transact any other business of the Bank with the approval of the Chair.

By Order of the Board

March 06, 2019 Zia-ul-Husnain ShamsiKarachi Company Secretary

1. Share Transfer Books of the Bank will remain closed from 21-03-2019 to 27-03-2019 (both days inclusive). Transfer received in order at Bank’s Registrar, M/s. Famco Associates (Pvt.) Ltd., 8-F, Next to Hotel Faran, Nursery, Block-6, P.E.C.H.S., Shahra-e-Faisal, Karachi, upto close of business on 20-03-2019 will be considered in time for the purpose of Annual General Meeting.

2. Copies of the minutes of the Annual General Meeting dated March 27, 2018 are available for inspection by Members as required under section 152 of the Companies Act, 2017.

3. Any member desirous to contest the Election of Directors shall file the following with the Company Secretary of the Bank not later than fourteen days before the day of the above said meeting;

a) His/her intention to offer himself/herself for the election in terms of section 159 (3) of the Companies Act 2017, he/she should confirm that;

• He/she is not ineligible to become a director of the Bank under any applicable laws and regulations (including Listing Regulations of Pakistan Stock Exchange).

• Neither he/she nor his/her spouse is engaged in the business of brokerage or is a sponsor, director or officer of a corporate brokerage house.

• He/she is not serving as a director in more than five listed companies simultaneously. Provided that this l imit shall not include the directorships in the listed subsidiaries of a listed holding company.

b) Consent to act as director in Form 28 under Section 167 of the Companies Act 2017.

c) Affidavits, Annexure and Questionnaire in terms of State Bank of Pakistan's BPRD Circular No. 04 dated April 23, 2007, BPRD Circular No. 05 dated March 12, 2015, and BPRD Circular No. 09 dated October 18, 2018.

A copy of the relevant documents may be downloaded from the websites of the Securities & Exchange Commission of Pakistan and State Bank of Pakistan or may be obtained from the office of the Company Secretary of the Bank.

4. A Member entitled to attend and vote at the Annual General Meeting may appoint another Member as his/her proxy to attend and vote for him/her provided that a corporation may appoint as its proxy a person who is not a Member but is duly authorized by the corporation. Proxies must be received at the Registered Office of the Bank not less than 48 hours before the time of the holding of the Annual General Meeting.

5. CDC account holders will be required to follow the under mentioned guidelines as laid down in Circular No. 01 dated January 26, 2000, of the Securities and Exchange Commission of Pakistan for attending the meeting.

6. CDC shareholders, the account holder or sub-account holder whose registration details are uploaded as per the Central Depository Company of Pakistan Limited Regulations, shall authenticate his/her identity by showing his/her original Computerised National Identity Card (CNIC) or original passport at the time of attending the Annual General Meeting.

7. In the case of a corporate entity, the Board of Directors' resolution/power of attorney with specimen signature of the nominee shall be produced at the time of the Annual General Meeting (unless it has been provided earlier), to the Bank along with the proxy form.

8. Shareholders are requested to notify any change in their addresses to the Bank’s Shares Registrar, M/s. Famco Associates (Pvt.) Ltd., 8-F, Next to Hotel Faran, Nursery, Block-6, P.E.C.H.S., Shahra-e-Faisal, Karachi, immediately.

Circulation of Annual Audited Accounts via Email/CD/USB/DVD or Any Other Media

Pursuant to the directions given by the Securities and Exchange Commission of Pakistan through its SRO 787(1)/2014 dated September 8, 2014 and SRO 470(1)/2016 dated May 31, 2016 that have allowed the companies to circulate its Annual Audited Accounts (i.e. Annual Balance Sheet and Profit and Loss Accounts, Statements of Comprehensive Income, Cash Flow Statement, Notes to the Financial, Statements Auditor's and Director's Report) to its members through CD / DVD / USB / or any other Electronic Media at their registered Addresses.

Shareholders who wish to receive the hardcopy of Financial Statements shall have

to fill the standard request form (also available on the company's website www.samba.com.pk) and send us to the Company address.

Submission of CNIC (mandatory)

Pursuant to the directives of the SECP, CNIC/SNIC numbers of shareholder is MANDATORILY to be mentioned on dividend warrants. Shareholders are therefore, requested to submit a copy of their valid CNIC/SNIC (if not already provided) to the company’s Share Registrar, M/s. Famco Associates (Pvt.) Ltd., 8-F, Next to Hotel Faran, Nursery, Block-6, P.E.C.H.S., Shahra-e-Faisal, Karachi. In the absence of a member’s valid CNIC/SNIC, the Company will be constrained to withhold dispatch of dividend warrant to such members.

Notes:

Standard Request Form

38

Independent Auditor’s Report To The Members Of Samba Bank Limited

Report on the Audit of the Financial Statements

Opinion

We have audited the annexed financial statements of Samba Bank Limited (the Bank), which comprise the statement of financial position as at December 31, 2018, and the profit and loss account, the statement of comprehensive income, the statement of changes in equity and the cash flow statement for the year then ended, along with unaudited certified returns received from the branches except for 10 branches which have been audited by us and notes to the financial statements, including a summary of significant accounting policies and other explanatory information and we state that we have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of the audit.

In our opinion and to the best of our information and according to the explanations given to us, the statement of financial position, profitand loss account, the statement of comprehensive income, statement of changes in equity and cash flow statement together with the notes forming part thereof conform with the accounting and reporting standards as applicable in Pakistan, and, give the information required by the Banking Companies Ordinance, 1962 and the Companies Act, 2017 (XIX of 2017), in the manner so required and respectively give a true and fair view of the state of the Bank’s affairs as at December 31, 2018 and of the profit and other comprehensive loss, the changes in equity and its cash flows for the year then ended.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Pakistan. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Bank in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants as adopted by the Institute of Chartered Accountants of Pakistan (the Code) and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Following are the Key Audit Matters:

Provision against advances(Refer note 10 to the financial statements) The Bank makes provision against advances on a time based criteria that involves ensuring all non-performing loans and advances are classified in accordance with the ageing criteria specified in the Prudential Regulations (PRs) issued by the State Bank of Pakistan (SBP).

In addition to the above time based criteria the PRs require a subjective evaluation of the credit worthiness of borrowers to determine the classification of advances.

The PRs also require the creation of general provision for theconsumer portfolio.

The Bank has recognized a net reversal of provision against advances amounting to Rs. 17.408 million in the profit and loss account in the current year. As at December 31, 2018, the Bank holds a provision of Rs 2,299.525 million against advances.

The determination of provision against advances based on the above criteria remains a significant area of judgement and estimation. Because of the significance of the impact of these judgements / estimations and the materiality of advances relative to the overall statement of financial position of the Bank, we

Our audit procedures to verify provision against advances, amongst others, included the following:

We reviewed the design and tested the operating effectiveness of key controls established by the Bank to identify loss events and for determining the extent of provisioning required against non-performing loans.

The testing of controls included testing of:

• controls over monitoring of advances with higher risk of default and correct classification of non-performing advances on subjective criteria;

• controls over accurate computation and recording of provisions; and

• controls over the governance and approval process related to provisions, including continuous reassessment by the management.

In accordance with the regulatory requirement, we sampled and tested at least sixty percent of the total advances portfolio and

1

S.No. Key Audit Matters How the matter was addressed in our audit

39

Information Other than the Financial Statements and Auditor’s Report Thereon

Management is responsible for the other information. The other information comprises the information included in the Annual Report, but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of assuranceconclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

considered the area of provision against advances as a key audit matter.

Change in format of the financial statements(Refer note 5.1.1 to the financial statements)

The State Bank of Pakistan (SBP) has amended the format of annual financial statements of banks. All banks are directed to prepare their annual financial statements on the revised format effective from the accounting year ending December 31, 2018. Accordingly, the Bank has prepared these financial statements on the new format prescribed by the SBP.

As part of this transition to the new requirements, the management performed a gap analysis to identify differences between the previous and current format. The adoption of new format required certain recognition requirements, reclassification of comparative information and also introduced additional disclosure requirements.

In view of the significant impact of the first time adoption of the revised format on these financial statements, we considered this as a key audit matter.

performed the following substantive procedures for sample loan accounts:

• verified repayments of loan / mark-up installments and checked that non-performing loans have been correctly classified and categorized based on the number of days overdue.

• examined watch list accounts and, based on review of the individual facts and circumstances, discussions with management and our assessment of financial conditions of the borrowers, formed a judgement as to whether classification of these accounts as performing was appropriate.

We checked the accuracy of specific provision made against non-performing advances and of general provision made against consumer finance by recomputing the provision amount in accordance with the criteria prescribed under the PRs.

We reviewed and understood the requirements of the SBP’s amended format of annual financial statements for banks. Our audit procedures included the following:

• considered the management’s process to identify the changes required in the financial statements to comply with the new format; and

• obtained relevant underlying supports relating to changes required in the financial statements consequent to the adoption of the new format to assess their appropriateness and verified them on a test basis.

2

S.No. Key Audit Matters How the matter was addressed in our audit

Responsibilities of Management and the Board of Directors for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting and reporting standards as applicable in Pakistan, the requirements of Banking Companies Ordinance, 1962 and the Companies Act, 2017 (XIX of 2017) and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so.

The Board of directors is responsible for overseeing the Bank’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs as applicable in Pakistan will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs as applicable in Pakistan, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Bank’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Bank to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide to the Board of Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

40

41

Report on Other Legal and Regulatory Requirements

Based on our audit, we further report that in our opinion:

a) proper books of account have been kept by the Bank as required by the Companies Act, 2017 (XIX of 2017) and the returns referred above from the branches have been found adequate for the purpose of our audit;

b) the statement of financial position, the profit and loss account, the statement of comprehensive income, statement of changes in equity and cash flow statement together with the notes thereon have been drawn up in conformity with the Banking Companies Ordinance, 1962 and the Companies Act, 2017 (XIX of 2017) and are in agreement with the books of account and returns;

c) investments made, expenditure incurred and guarantees extended during the year were in accordance with the objects and powers of the Bank and the transactions of the Bank which have come to our notice have been within the powers of the Bank; and

d) zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980), was deducted by the Bank and deposited in the Central Zakat Fund established under section 7 of that Ordinance.

2. We confirm that for the purpose of our audit we have covered more than sixty per cent of the total loans and advances of the Bank.

The engagement partner on the audit resulting in this independent auditor’s report is Shahbaz Akbar.

A. F. Ferguson & Co.Chartered AccountantsDated: February 28, 2019Karachi

42

Statement of Financial PositionAS AT DECEMBER 31, 2018

(Rupees in ‘000)

(Restated) (Restated)

2017 20162018Note

ASSETS

Cash and balances with treasury banks 6 5,154,790 3,887,745

Balances with other banks 7 496,174 127,386

Lendings to financial institutions 8 9,449,244 5,192,950

Investments - net 9 48,021,370 62,918,102

Advances - net 10 53,592,255 40,181,773

Fixed assets 11 1,064,563 1,113,248

Intangible assets 12 120,648 133,370

Deferred tax assets - net 13 700,767 436,816

Other assets - net 14 4,164,776 4,232,118

122,764,587 118,223,508

LIABILITIES

Bills payable 15 877,017 686,692

Borrowings 16 39,780,603 46,201,468

Deposits and other accounts 17 65,225,052 54,901,464

Liabilities against assets subject to finance lease - - - -

Subordinated debt - - - -

Deferred tax liabilities - - - -

Other liabilities 18 4,098,160 3,725,690

109,980,832 105,515,314

NET ASSETS 12,783,755 12,708,194

REPRESENTED BY:

Share capital 19 10,082,387 10,082,387

Reserves 691,997 555,451

(Deficit) / surplus on revaluation of assets 20 (380,015 ) 227,153

Unappropriated profit 2,389,386 1,843,203

12,783,755 12,708,194

CONTINGENCIES AND COMMITMENTS 21

The annexed notes 1 to 45 and Annexures I and II form an integral part of these financial statements.

Chief Financial Officer President & Chief Executive Officer Chairman Director Director

4,723,664

816,421

5,277,254

57,237,456

28,789,980

1,290,007

168,708

409,641

4,386,604

103,099,735

915,076

35,847,072

50,306,804

- -

- -

- -

3,711,259

90,780,211

12,319,524

10,082,387

407,680

577,336

1,252,121

12,319,524

43

Profit and Loss AccountFOR THE YEAR ENDED DECEMBER 31, 2018

(Rupees in ‘000)

20172018Note

Mark-up / return / interest earned 22 7,555,595 7,256,121 Mark-up / return / interest expensed 23 4,847,164 4,896,833 Net mark-up / return / interest income 2,708,431 2,359,288

Non mark-up / interest income Fee and commission income 24 265,594 210,616 Dividend income 45,332 44,661 Foreign exchange income 237,464 138,260 Gain on securities 25 214,586 94,258 Other income 26 3,743 227,351 Total non mark-up / interest income 766,719 715,146 Total income 3,475,150 3,074,434

Non mark-up / interest expenses Operating expenses 27 2,258,765 2,023,044 Workers' Welfare Fund 28 23,024 19,014 Other charges 29 15,278 36 Total non mark-up / interest expenses 2,297,067 2,042,094 Profit before provisions 1,178,083 1,032,340 Provisions and write offs - net 30 (68,364 ) (101,412 )Extra ordinary / unusual items - - -

Profit before taxation 1,109,719 930,928 Taxation 31 (426,990 ) (192,075)

Profit after taxation 682,729 738,853 (Rupees)

Earnings per share - basic and diluted 32 0.68 0.73



(Restated)

44

Statement of Comprehensive IncomeFOR THE YEAR ENDED DECEMBER 31, 2018

(Rupees in ‘000)

Profit after taxation for the year 682,729 738,853 Other comprehensive income - - - - Items that may be reclassified to profit and loss account in subsequent periods: Movement in deficit on revaluation of investments - net of tax (607,168 ) (350,183 ) Total comprehensive income for the year 75,561 388,670


20172018


Cash Flow StatementFOR THE YEAR ENDED DECEMBER 31, 2018

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 1,109,719 930,928 Less: dividend income (45,332 ) (44,661 ) 1,064,387 886,267 Adjustments: Depreciation 163,933 169,864 Amortisation 34,020 40,528 Provision / (reversal) for diminution in the value of investments 99,926 (16,766) (Reversal) / provision against loans and advances - net (17,408 ) 126,887 Bad debts written off directly 27 - - Fixed assets written-off / adjusted 2,111 41,452 (Surplus) / deficit on revaluation of investments held for trading (1,723 ) 42 Reversal of provision against off balance sheet obligation and other assets (14,130 ) (9 ) Gain on sale of fixed assets - net (3,591 ) (227,336 ) 263,165 134,662 1,327,552 1,020,929 (Increase) / decrease in operating assets Lendings to financial institutions (4,256,294 ) 84,304 Held-for-trading securities (4,549,508 ) (1,483,174 ) Advances (13,393,101 ) (11,518,680 ) Other assets (excluding current and advance taxation) (293,520 ) 147,630 (22,492,423 ) (12,769,920 )Increase / (decrease) in operating liabilities Bills payable 190,325 (228,384 ) Borrowings from financial institutions (6,420,865 ) 10,354,396 Deposits and other accounts 10,323,588 4,594,660 Other liabilities 386,600 14,431 4,479,648 14,735,103 (16,685,223 ) 2,986,112 Income tax paid (5,992 ) (23,802 )Net cash flows (used in) / generated from operating activities (16,691,215 ) 2,962,310 CASH FLOWS FROM INVESTING ACTIVITIES Net investments in available-for-sale securities 18,413,932 (4,719,490 )Dividend income received 48,182 44,636 Investments in fixed assets (147,296 ) (126,714 )Proceeds from sale of fixed assets 12,230 314,304 Net cash flows generated from / (used in) investing activities 18,327,048 (4,487,264 ) CASH FLOWS FROM FINANCING ACTIVITIES - - - - Increase / (decrease) in cash and cash equivalents during the year 1,635,833 (1,524,954 )Cash and cash equivalents at the beginning of the year 4,015,131 5,540,085

Cash and cash equivalents at the end of the year 33 5,650,964 4,015,131


(Rupees in ‘000)

20172018Note


(Restated)

45

46

Statement of Changes in EquityFOR THE YEAR ENDED DECEMBER 31, 2018

Sharecapital

Capitalreserve

Statutoryreserve

Surplus / (deficit) on revaluation of

investments

Unappropriatedprofit Total

(Rupees in ‘000)

Balance as at December 31, 2016 (as previously reported) 10,082,387 20,935 386,745 - - 1,252,121 11,742,188 Reclassification of surplus to equity (note 5.1) - - - - - - 577,336 - - 577,336 Balance as at December 31, 2016 (as restated) 10,082,387 20,935 386,745 577,336 1,252,121 12,319,524 Comprehensive income for the year Profit after taxation for the year ended December 31, 2017 - - - - - - - - 738,853 738,853 Other comprehensive loss Movement in deficit on revaluation of investments - net of tax - - - - - - (350,183 ) - - (350,183 ) - Transfer to statutory reserve - - - - 147,771 - - (147,771 ) - - Balance as at December 31, 2017 (as restated) 10,082,387 20,935 534,516 227,153 1,843,203 12,708,194 Comprehensive income for the year Profit after taxation for the year ended December 31, 2018 - - - - - - - - 682,729 682,729 Other comprehensive loss Movement in deficit on revaluation of investments - net of tax - - - - - - (607,168 ) - - (607,168 ) - Transfer to statutory reserve - - - - 136,546 - - (136,546 ) - - Balance as at December 31, 2018 10,082,387 20,935 671,062 (380,015 ) 2,389,386 12,783,755



Notes to and forming part of the Financial StatementsFOR THE YEAR ENDED DECEMBER 31, 2018

1. STATUS AND NATURE OF BUSINESS

1.1 Samba Bank Limited (the Bank) is a banking company incorporated in Pakistan and is engaged in commercial banking and related services. The Bank is listed on the Pakistan Stock Exchange Limited. Its principal office is located at ground Floor, Arif Habib Centre, M.T. Khan Road, Karachi, whereas, the registered office of the Bank is located at 2nd floor, Building No. 13-T, F-7 Markaz. near Post Mall, Islamabad. The Bank is a subsidiary of SAMBA Financial Group of Saudi Arabia, which holds 84.51% shares of the Bank as at December 31, 2018 (2017: 84.51%). The Bank operates 37 branches as at December 31, 2018 (2017: 37 branches) inside Pakistan.

1.2 JCR-VIS has determined the Bank's medium to long-term rating as 'AA' with stable outlook and the short-term rating as 'A-1'.

2. BASIS OF PRESENTATION

2.1 In accordance with the directives of the Federal Government regarding the shifting of the Banking system to Islamic modes, the State Bank of Pakistan (SBP) has issued various circulars from time to time. Permissible forms of trade-related modes of financing include purchase of goods by banks from their customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in these financial statements as such but are restricted to the amount of facility actually utilised and the appropriate portion of mark-up thereon.

3. STATEMENT OF COMPLIANCE

3.1 These financial statements have been prepared in accordance with the accounting and reporting standards as applicable in Pakistan. The accounting and reporting standards comprise of: - International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) as are notified under the Companies Act, 2017;

- Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as are notified under the Companies Act, 2017;

- Provisions of and directives issued under the Banking Companies Ordinance, 1962 and the Companies Act, 2017; and

- Directives issued by the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP). Whenever the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 or the directives issued by the SBP and the SECP differ with the requirements of IFRS or IFAS the requirements of the Banking Companies Ordinance, 1962, the Companies Act, 2017 and the said directives, shall prevail.

3.2 The SBP vide BSD Circular letter No. 10, dated August 26, 2002 has deferred the applicability of International Accounting Standard 39, Financial Instruments: Recognition and Measurement and International Accounting Standard 40, Investment Property for banking companies till further instructions. Moreover, according to the notification of the SECP issued vide SRO 411(I)/2008 dated April 28, 2008, International Financial Reporting Standard (IFRS) 7, Financial Instruments: Disclosures has not been made applicable for banks. Accordingly, the requirements of these standards have not been considered in the preparation of these financial statements. However, investments have been classified and valued in accordance with the requirements of various circulars issued by the SBP.

3.3 Standards, amendments and interpretations to published approved accounting standards that are effective in the current year

The State Bank of Pakistan (SBP) through its BPRD Circular No. 02 of 2018 dated January 25, 2018 has amended the format of annual financial statements of banks. Accordingly, the Bank has prepared these financial statements on the new format prescribed by the SBP. The details of changes due to adoption of revised format are given in note 5.1.

In addition, there are certain other new standards and interpretations of and amendments to existing accounting standards that have become applicable to the Bank for accounting periods beginning on or after January 1, 2018. These are considered as either not relevant or do not have any significant impact on the Bank's financial statements.

i) classification and provisioning against investments (notes 5.4 and 9).

ii) classification and provisioning against advances (notes 5.5 and 10). iii) determination of useful lives and depreciation and amortisation of fixed assets and intangible assets (notes 5.6, 5.7, 11 and 12).

iv) income taxes (notes 5.9, 13 and 31).

v) provision against off balance sheet obligations (note 18.1).

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these financial statements are set out below. These have been consistently applied to all the years presented, except for change explained in note 5.1.

5.1 Change in accounting policies Cash and cash equivalents for the purpose of cash flow statement comprise of cash and balances with treasury banks and balances with other banks.

5.1.1 The SBP vide BPRD Circular No. 02 of 2018 dated January 25, 2018 has amended the format of annual financial statements of banks. All banks are directed to prepare their annual financial statements on the revised format effective from the accounting year ending December 31, 2018. Accordingly, the Bank has prepared these financial statements on the new format prescribed by the State Bank of Pakistan. The adoption of new format required remeasurement and reclassification of comparative information and accordingly a third statement of financial position as at the beginning of the preceding period (i.e. December 31, 2016) has been presented in accordance with the requirements of International Accounting Standard 1 – Presentation of Financial Statements. The adoption of the revised format has resulted in the following significant changes:

- Acceptances amounting to Rs 1,384.38 million (2017: Rs 1,072.46 million, 2016: Rs 1,685.24 million) which were previously shown as part of contingencies and commitments are now recognised on balance sheet both as assets and liabilities. They are included in Other Assets (note 14) and Other Liabilities (note 18);

- Deficit on revaluation of assets amounting to Rs 380.02 million as at December 31, 2018 (2017: surplus of Rs 227.15 million, 2016: surplus of Rs 577.34 million) were previously shown below equity as required by the repealed Companies Ordinance, 1984 and has now been included as part of equity (note 20);

- Intangibles (note 12) amounting to Rs 120.65 million (2017: Rs 133.37 million, 2016: Rs 168.71 million) which were previously shown as part of fixed assets (note 11) are now shown separately on the statement of financial position; and

- Certain reclassifications have been made in the statement of financial position and profit and loss account which are summarised in the note 43.1 to the financial statements.

5.2 Cash and cash equivalents

Cash and cash equivalents for the purpose of cash flow statement comprise of cash and balances with treasury banks and balances with other banks.

5.3 Lendings to / borrowings from financial institutions

The Bank enters into transactions of repos and reverse repos at contracted rates for a specified period of time. These are recordedas under: (a) Sale of securities under repurchase agreements Securities sold subject to a repurchase agreement (repo) are retained in the financial statements as investments and the counter party liability is included in borrowings. The differential between the sale price and contracted repurchase price is amortised over the period of the contract and recorded as an expense.

3.4 Standards, interpretations and amendments to approved accounting standards that are not yet effective

The following revised standards, amendments and interpretations with respect to the approved accounting standards would be effective from the dates mentioned below against the respective standard or interpretation:

Standard, Interpretations and Amendments Effective date (annual periods)

- IFRS 15 - Revenue from contracts with customers July 1, 2018 - IFRS 9 - Financial Instruments: Classification and Measurement July 1, 2018 - IFRS 11 - Joint Venture- (Amendments) January 1, 2019 - IFRS 16 - Leases January 1, 2019 - IAS 19 - Employee Benefits - (Amendments) January 1, 2019 - IAS 28 - Investments in Associates and Joint Ventures - (Amendments) January 1, 2019 - IFRIC 23 - Uncertainty over Income Tax Treatments January 1, 2019 - IFRS 3 - Business Combinations - (Amendments) January 1, 2020

IFRS 16 replaces existing guidance on accounting for leases, including IAS 17 'Leases', IFRIC 4 'Determining whether an Arrangement contains a Lease', SIC-15 'Operating Leases - Incentive and SIC-27 'Evaluating the Substance of Transactions Involving the Legal Form of a Lease'. IFRS 16 introduces a single, on balance sheet lease accounting model for lessees. A lessee recognizes a right-of-use asset representing its right to use the underlying asset and a lease liability representing its obligations to make lease payments. There are recognition exemptions for short-term leases and leases of low-value items. Lessor accounting remains similar to the current standard i.e. lessors continue to classify leases as finance or operating leases.

On adoption of IFRS 16, the Bank shall recognize a 'right of use asset' with a corresponding liability for lease payments. The Bank is in the process of assessing the full impact of this standard.

IFRS 9: 'Financial Instruments' addresses recognition, classification, measurement and derecognition of financial assets and financial liabilities. The standard has also introduced a new impairment model for financial assets which requires recognition of impairment charge based on an 'expected credit losses' (ECL) approach rather than the 'incurred credit losses' approach as currently followed. The ECL has impact on all assets of the Bank which are exposed to credit risk.

The Bank is currently awaiting instructions from the SBP as applicability of IAS 39 was deferred by SBP till further instructions.

The Bank expects that adoption of the remaining interpretations and amendments will not affect its financial statements in the period of initial application.

4. BASIS OF MEASUREMENT

4.1 Accounting convention These financial statements have been prepared under the historical cost convention except that certain investments, foreign currency balances, commitments in respect of foreign exchange contracts and derivative financial instruments have been marked to market and are carried at fair value.

4.2 Functional and presentation currency

Items included in these financial statements are measured using the currency of the primary economic environment in which the Bank operates. These financial statements have been presented in Pakistani Rupees, which is the Bank's functional and presentation currency.

4.3 Critical accounting estimates and judgments The preparation of financial statements in conformity with accounting and reporting standards as applicable in Pakistan requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities and income and expenses. It also requires management to exercise judgment in application of its accounting policies. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. These estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods.

Significant accounting estimates and areas where judgments were made by the management in the application of accounting policies are as follows:

(c) Held-to-maturity

These are measured at amortised cost using the effective interest rate method, less any impairment loss recognised to reflect irrecoverable amount.

5.4.5 Impairment Impairment loss in respect of investments classified as 'available for sale' (except for term finance certificates) is recognised based on management's assessment of objective evidence of impairment as a result of one or more events that may have an impact on the estimated future cash flows of these investments. A significant or prolonged decline in the value of equity securities is also considered as an objective evidence of impairment. The Prudential Regulations specify that investments in unlisted equity securities are required to be carried at cost. However, in cases where the breakup value of such equity securities is less than the cost, the difference between the cost and breakup value should be charged to the profit and loss account as an impairment charge. In the case of such securities, impairment loss is reversed when the shares are disposed of. Provision for diminution in the value of term finance certificates is made as per the requirements of the Prudential Regulations issued by the SBP. In the event of impairment of available for sale securities, the cumulative loss that had been recognised directly in surplus on revaluation of securities in the statement of financial position is removed thereof and recognised in the profit and loss account. For investments classified as held to maturity, the impairment loss is recognised in the profit and loss account.

5.4.6 Gain / loss on disposal of investments made during the year is credited / charged to the profit and loss account.

5.5 Advances (a) Loans and advances

Advances are stated at cost less specific and general provisions. Specific provision for non-performing advances is determined keeping in view the Bank's policy subject to the minimum requirement set out by the Prudential Regulations and other directives issued by the SBP and charged to the profit and loss account. General provision against consumer and small enterprises financing portfolio is maintained as per the requirements set out in the Prudential Regulations issued by the SBP. Advances are written off when there are no realistic prospects of recovery.

(b) Net investment in finance leases

Net investment in finance leases is stated at net of provisions made against non-performing leases. Leasing arrangements in which the Bank transfers substantially all risks and rewards incidental to the ownership of an asset to the lessee, are classified as finance lease. A receivable is recognised on commencement of the lease term at an amount equal to the present value of minimum lease payments including guaranteed residual value, if any. Unearned finance income is recognised over the term of the lease period so as to produce a constant periodic return on the outstanding net investment in the lease. Unrealised lease income in respect of non-performing finance leases is suspended in accordance with the Prudential Regulations issued by the SBP.

5.6 Fixed assets and depreciation

(a) Property and Equipment

(i) Owned Assets Owned assets are stated at cost less accumulated depreciation and accumulated impairment losses, if any, except for capital work-in-progress and freehold land. Capital work-in-progress and freehold land are stated at cost less accumulated impairment losses, if any. Depreciation on fixed assets (excluding land which is not depreciated) is charged using the straight line method in accordance with the rates specified in note 11.2 to these financial statements after taking into account the residual value, if significant. The assets' residual values and useful lives are reviewed and adjusted, if required, at each statement of financial position date. Depreciation on additions is charged from the month the assets are available for use. No depreciation is charged in the month of disposal. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. All other repair and maintenance is charged to the profit and loss account as and when incurred.

An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its

estimated recoverable amount.

(b) Purchase of securities under resale agreements Securities purchased under agreement to resell (reverse repo) are included in lendings to financial institutions. The difference between the purchase price and contracted resale price is amortised over the period of the contract and recorded as income.

(c) Bai Muajjal

The securities sold under Bai Muajjal agreement are derecognised on the date of disposal. Receivable against such sale is recognised at the agreed sale price. The difference between the sale price and the carrying value on the date of disposal is taken to income on straight line basis.

5.4 Investments

5.4.1 Classification

The Bank classifies its investments as follows:

(a) Held for trading

These are investments, which are either acquired for generating a profit from short-term fluctuations in market prices, interest rate movements, dealers margin or are securities included in a portfolio in which a pattern of short-term profit taking exists.

(b) Held to maturity These are investments with fixed or determinable payments and fixed maturities and the Bank has the positive intent and ability to hold them till maturity.

(c) Available for sale

These are investments, that do not fall under the 'held for trading' or 'held to maturity' categories.

5.4.2 Regular way contracts All purchases and sales of investments that require delivery within the time frame established by regulation or market convention are recognised at trade date, which is the date on which the Bank commits to purchase or sell the investments. Regular way purchases or sales are purchases or sales of investments that require delivery within the time frame generally established by regulation or convention in the market place.

5.4.3 Initial recognition and measurement

Investments other than those categorised as 'held for trading' are initially recognised at fair value which includes transaction costs associated with the investment. Investments classified as 'held for trading' are initially recognised at fair value while the related transaction costs are expensed out in the profit and loss account.

5.4.4 Subsequent measurement

Subsequent to initial recognition investments are valued as follows:

(a) Held-for-trading

Investments classified as held-for-trading are subsequently measured at fair value. Any unrealised surplus / deficit arising on revaluation is taken to the profit and loss account.

(b) Available-for-sale

Quoted securities classified as available-for-sale are subsequently measured at fair value. Any unrealised surplus / deficit arisingon revaluation is recorded in the surplus / deficit on revaluation of securities account shown as part of equity in thestatement of financial position and is taken to the profit and loss account either when realised upon disposal or when the investment is considered to be impaired.

Unquoted equity securities are carried at the lower of cost and break-up value. The break-up value is calculated with reference to the net assets of the investee company as per its latest available audited financial statements. Other unquoted securities are valued at cost less impairment, if any.

of assets and liabilities used for financial reporting purposes and amounts used for taxation purposes. In addition, the Bank also records deferred tax asset on available tax losses. Deferred tax is calculated using the rates that are expected to apply to the period when the differences reverse based on tax rates that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. The carrying amount of the deferred tax asset is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilised. The Bank also recognises deferred tax asset / liability on (deficit) / surplus on revaluation of securities which is adjusted against the related (deficit) / surplus in accordance with the requirements of the International Accounting Standard (IAS-12) dealing withincome taxes.

5.10 Provisions Provision for claims under guarantees and other off balance sheet obligations is recognised when identified and reasonable certainty exists for the Bank to settle the obligation. Expected recoveries are recognised by debiting the customer’s account. Charge to the profit and loss account is stated net-of expected recoveries. Other provisions are recognised when the Bank has a legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions are reviewed at each statement of financial position date and are adjusted to reflect the current best estimate.

5.11 Staff retirement benefits

(a) Defined contribution plan

The Bank operates a contributory provident fund scheme covering all its permanent employees. Equal monthly contributions are made both by the Bank and the employees in respect of this benefit. Obligations for contributions to define contribution plan are recognised as an employee benefit expense in the profit and loss account when they are due. Prepaid contributions are recognised as an asset to the extent that cash refund or reduction in future payments is available.

(b) Compensated absences The liability in respect of compensated absences of employees is accounted for in the period in which the absences accrue.

5.12 Borrowings / deposits and their cost Borrowings / deposits are recorded when the proceeds are received. Borrowing / deposit costs are recognised as an expense in the period in which these are incurred using the effective mark-up / interest rate method to the extent that they are not directly attributable to the acquisition of or construction of qualifying assets. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) is capitalised as part of the cost of that asset.

5.13 Proposed dividend and transfers between reserves Dividends and appropriations to reserves, except appropriations which are required by law, made subsequent to the statement of financial position date are considered as non-adjusting events and are recorded in the financial statements in accordance with the requirements of International Accounting Standard (IAS) 10, 'Events after the Balance Sheet Date' in the year in which they are approved / transfers are made.

5.14 Revenue recognition

- Mark-up income / interest on advances and returns on investments are recognised on a time proportionate basis using the effective interest method except that mark-up / income / return on classified advances and investments is recognised on receipt basis in accordance with the requirements of the Prudential Regulations issued by the SBP. Interest / return / mark-up on rescheduled / restructured advances and investments is recognised as permitted by the Prudential Regulations issued by the SBP, except where, in the opinion of the management, it would not be prudent to do so.

- Fee, commission and brokerage income are accounted for on an accrual / time proportion basis.

Gains / losses on disposal of fixed assets, if any, are taken to the profit and loss account in the period in which they arise.

(ii) Leased assets Leases are classified as finance leases wherever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Lease payments, if any, under operating leases are charged to the profit and loss account on a straight line basis over the lease term. Premium paid at the time of renewal, if any, is amortised over the remaining period of the lease. Assets held under finance lease are stated at lower of their fair value or present value of minimum lease payments at inception less accumulated depreciation and accumulated impairment losses, if any. The outstanding obligations under the lease agreements are shown as a liability net of finance charges allocable to the future periods.

The finance charges are allocated to the accounting periods in a manner so as to provide a constant periodic rate of return on the outstanding liability. Depreciation on assets held under finance lease is charged in a manner consistent with that for depreciable assets which are owned by the Bank.

(b) Capital work-in-progress Capital work-in-progress is stated at cost less accumulated impairment losses, if any. All expenditure connected with specific assets incurred during installation and construction period are carried under this head. These are transferred to specific assets as and when assets become available for use.

5.7 Intangible assets

Intangible assets having definite useful lives are stated at cost less accumulated amortisation and accumulated impairment losses, if any. Amortisation is charged by applying the straight-line method over the useful life of the assets. Amortisation is calculated so as to write-off the assets over their expected economic lives at the rates specified in note 12 to these financial statements. Amortisation is charged from the month in which the asset is available for use. No amortisation is charged for the month in which the asset is disposed of. The residual value, useful life and amortisation method are reviewed and adjusted, if appropriate, at each statement of financial position date. Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Bank and the cost of the item can be measured reliably. Intangible assets having an indefinite useful life are stated at acquisition cost less accumulated impairment losses, if any. Gains and losses on disposals, if any, are taken to the profit and loss account in the period in which they arise.

5.8 Impairment

At each reporting date, the Bank reviews the carrying amounts of its assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of impairment loss. Recoverable amount is the greater of fair value less cost to sell and value in use. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. Impairment loss is recognised as an expense immediately in the profit and loss account. Where an impairment loss reverses subsequently, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior years. A reversal of an impairment loss is recognised as income immediately.

5.9 Taxation

(a) Current

The provision for current taxation is based on taxable income for the year, if any, at current rates of taxation, after taking into consideration available tax credits, rebates and tax losses as specified under the seventh schedule to the Income Tax Ordinance, 2001. The charge for current tax also includes adjustments, where considered necessary relating to prior years, which arises from assessments / developments made during the year.

(b) Deferred Deferred tax is recognised using the balance sheet liability method on all major temporary differences between the carrying amounts

- Dividend income from investments is recognised when the Bank's right to receive the dividend has been established. - Financing method is used in accounting for income from lease financing. Under this method, the unearned lease income (excess of the sum of total lease rentals and estimated residual value over the cost of the leased assets) is deferred and taken to income over the term of the lease so as to produce a constant periodic rate of return on the outstanding net investment in the lease. - Unrealised lease income in respect of non-performing finance leases and markup / return on non-performing advances is held in suspense account.

- Premium or discount on acquisition of debt investments is capitalised and amortised through the profit and loss account over the remaining period till maturity.

- Gains / losses on termination of lease contracts, documentation charges, front end fee and other lease income are recognised as income when realised.

5.15 Foreign currencies (a) Foreign currency transactions

Foreign currency transactions are translated into Pakistani Rupees at the exchange rates prevailing on the date of transaction. Monetary assets and liabilities in foreign currencies are translated into Pakistani Rupees at exchange rates prevailing at the reporting date. Foreign bills purchased and forward foreign exchange contracts are valued at the rates applicable to their respective maturities.

(b) Translation gains and losses Translation gains and losses are included in the profit and loss account.

(c) Contingencies and commitments Commitments for outstanding forward foreign exchange contracts are disclosed at contracted rates. Contingent liabilities / commitments for letters of credit and letters of guarantee denominated in foreign currencies are expressed in Pakistani rupee terms at the exchange rate prevailing at the reporting date.

5.16 Segment reporting

The Bank has structured its key business areas in various segments in a manner that each segment becomes a distinguishable component of the Bank that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The segment reported below are consistent to that reported to the President and Chief Executive Officer of the Bank.

(a) Business segments

(i) Corporate Banking Corporate banking includes project finance, real estate, export finance, trade finance, leasing, lending, guarantees, bills of exchange and deposits and includes services provided in connection with mergers and acquisitions, underwriting, privatisation, securitisation, research, debt (government and high yield) and equity syndications, IPO and secondary private placements. These services are being offered to large corporate entities.

(ii) Global Markets

It includes fixed income on debt securities, equity, foreign exchanges, commodities, credit, funding, own position securities, lending and repos, brokerage debt and prime brokerage.

(iii) Retail banking

It includes retail / consumer lending and deposits, banking services, trust and estates, private lending and deposits, banking service, trust and estates investment advice, merchant / commercial / corporate cards and private labels and retail.

(iv) Commercial banking Commercial banking includes lendings, export finance, trade finance, bills of exchange and deposits. These services are being offered to commercial customers and small & medium sized entities.

(v) Senoff It includes certain corporate assets and liabilities which are not allocated to business segments.

(b) Geographical segments

The operations of the Bank are currently based only in Pakistan.

5.17 Earnings per share The Bank presents basic and diluted earnings per share (EPS) for its shareholders. Basic EPS is calculated by dividing the profit or loss, as the case may be, attributable to ordinary shareholders of the Bank by the weighted average number of ordinary shares outstanding during the year. Diluted EPS per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding after including the effects of all dilutive potential ordinary shares, if any.

5.18 Financial instruments

5.18.1 Financial assets and liabilities All financial assets and liabilities are recognised at the time when the Bank becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the Bank loses control of the contractual rights that comprise the financial assets. Financial liabilities are derecognised when they are extinguished, i.e. when the obligation specified in the contract is discharged, cancelled or expired. Any gain / loss on derecognition of the financial assets and financial liabilities is taken to income directly. Financial instruments carried on the statement of financial position include cash and balances with treasury banks, balances with other banks, lendings to financial institutions, investments, advances, certain other assets, bills payable, borrowings, deposits and certain other liabilities. The particular recognition methods adopted for significant financial assets and financial liabilities are disclosed in the individual policy statements associated with these assets and liabilities.

5.18.2 Off-setting of financial instruments

Financial assets and financial liabilities are off-set and the net amount is reported in the financial statements only when there is a

legally enforceable right to set off the recognised amount and the Bank intends either to settle on a net basis, or to realise the assets and to settle the liabilities simultaneously.

5.18.3 Derivatives

Derivative financial instruments are recognised at fair value. Derivatives with positive market values (unrealised gains) are included in other assets and derivatives with negative market values (unrealised losses) are included in other liabilities in the statement of financial position. The resultant gains and losses are taken to the profit and loss account.

5.19 Fiduciary assets

Assets held in a fiduciary capacity are not treated as assets of the Bank in these financial statements.

5.20 Acceptances

Acceptances comprise undertakings by the Bank to pay bill of exchange drawn on customers. Acceptances are recognised as financial liability in the statement of financial position with a contractual right of reimbursement from the customer as a financial asset. Therefore, commitments in respect of acceptances have been accounted for as financial assets and financial liabilities.

47

48




























































(c) Bai Muajjal


5.4 Investments



































5.8 Impairment


5.9 Taxation

(a) Current














(ii) Global Markets














5.18.3 Derivatives




5.20 Acceptances





























































(c) Bai Muajjal


5.4 Investments



































5.8 Impairment


5.9 Taxation

(a) Current














(ii) Global Markets














5.18.3 Derivatives




5.20 Acceptances


49

50




























































(c) Bai Muajjal


5.4 Investments



































5.8 Impairment


5.9 Taxation

(a) Current














(ii) Global Markets














5.18.3 Derivatives




5.20 Acceptances





























































(c) Bai Muajjal


5.4 Investments



































5.8 Impairment


5.9 Taxation

(a) Current














(ii) Global Markets














5.18.3 Derivatives




5.20 Acceptances


51

52




























































(c) Bai Muajjal


5.4 Investments



































5.8 Impairment


5.9 Taxation

(a) Current














(ii) Global Markets














5.18.3 Derivatives




5.20 Acceptances





























































(c) Bai Muajjal


5.4 Investments



































5.8 Impairment


5.9 Taxation

(a) Current














(ii) Global Markets














5.18.3 Derivatives




5.20 Acceptances


53

54




























































(c) Bai Muajjal


5.4 Investments



































5.8 Impairment


5.9 Taxation

(a) Current














(ii) Global Markets














5.18.3 Derivatives




5.20 Acceptances





























































(c) Bai Muajjal


5.4 Investments



































5.8 Impairment


5.9 Taxation

(a) Current














(ii) Global Markets














5.18.3 Derivatives




5.20 Acceptances


55

56

6. CASH AND BALANCES WITH TREASURY BANKS

In hand

Local currency 446,171 476,923

Foreign currencies 307,479 248,455

753,650 725,378

With State Bank of Pakistan in

Local currency current account 6.1 2,901,468 2,045,675

Foreign currency current account (cash reserve account) 371,317 276,926

Foreign currency deposit account (USD settlement account) 5,204 5,116

Foreign currency deposit account (special cash reserve account) 6.2 1,113,950 830,669

4,391,939 3,158,386

With National Bank of Pakistan in

Local currency current account 8,957 3,822

National Prize Bonds 244 159

5,154,790 3,887,745

20172018Note

(Rupees in ‘000)

20172018Note

(Rupees in ‘000)

20172018Note

(Rupees in ‘000)

6.1 The local currency account is maintained with the State Bank of Pakistan (SBP) as per the requirements of Section 22 of the Banking Companies Ordinance, 1962. This section requires banking companies to maintain a local currency cash reserve in current account opened with the SBP at a sum not less than such percentage of its time and demand liabilities in Pakistan as may be prescribed by the SBP.

6.2 This mainly represents reserve required to be maintained with the SBP at an amount equivalent to atleast 20% of the Bank's foreign currency deposits mobilised under FE-25 scheme. This foreign currency cash reserve comprises an amount equivalent to at least 5% of the Bank's foreign currency deposits mobilised under the FE-25 scheme, which is kept in a non-remunerative account (cash reserve account). The balance reserve equivalent to at least 15% of the Bank's foreign currency deposits mobilised under FE-25 scheme is maintained in a remunerative account (special cash reserve account) on which the Bank is entitled to earn a return which is declared by the SBP on a monthly basis. These deposits carry markup at the rate of 1.35% (2017: 0.37%) per annum.

7. BALANCES WITH OTHER BANKS

In Pakistan

In current account 42,327 3,802

In deposit account 7.1 15 15

Outside Pakistan

In current account 7.2 453,832 123,569

496,174 127,386

7.1 These carry mark-up at the rate of 8% (2017: 4%) per annum.

7.2 The above amount includes balance with SAMBA Financial Group (a related party) amounting Rs. 17.434 million (2017: Rs. 12.964 million).

8. LENDINGS TO FINANCIAL INSTITUTIONS

Call / clean money lendings - - 4,500,000

Repurchase agreement lendings (Reverse Repo) 8.2 9,449,244 692,950

9,449,244 5,192,950

Less: provision held against Lending to Financial Institutions - - - -

Lending to Financial Institutions - net of provision 9,449,244 5,192,950

8.1 Particulars of lending

In local currency 9,449,244 5,192,950

(Rupees in ‘000)

2018

8.2 Securities held as collateral against lendings to financial institutions

Particulars Held by

Further Held by

Further

bank given as Total

bank given as Total

collateral collateral Market Treasury Bills 450,000 - 450,000 700,000 - 700,000 Pakistan Investment Bonds 4,000,000 5,000,000 9,000,000 - - - Total 4,450,000 5,000,000 9,450,000 700,000 - 700,000

2017

(Rupees in ‘000)

2018

8.2.1 These represent short-term lendings to financial institutions against investment securities. These carry mark-up ranging from 8.50% to 10.30% (2017: 6.00%) per annum and will mature latest by January 02, 2019 (2017: January 02, 2018).

8.2.2 The market value of securities held as collateral against repurchase agreement lendings amounted to Rs. 8,701.78 million(2017: Rs. 692.60 million).

9. INVESTMENTS - NET

9.1 Investments by type Held for trading securities Federal Government Securities 6,044,128 - - 1,723 6,045,851 1,494,662 - - (42 ) 1,494,620 Available for sale securities Federal Government Securities 34,518,518 - - (508,329 ) 34,010,189 53,972,479 - - 433,306 54,405,785 Shares 1,075,942 (117,846 ) (94,852 ) 863,244 970,212 (17,920 ) (89,614 ) 862,678 Non Government Debt Securities 2,164,982 - - 18,543 2,183,525 1,173,947 - - 5,775 1,179,722 37,759,442 (117,846 ) (584,638 ) 37,056,958 56,116,638 (17,920 ) 349,467 56,448,185 Held to maturity securities Federal Government Securities 4,918,561 - - - - 4,918,561 4,975,297 - - - - 4,975,297 Total Investments 48,722,131 (117,846 ) (582,915 ) 48,021,370 62,586,597 (17,920 ) 349,425 62,918,102

9.2 Investments by segment Federal Government Securities: Market Treasury Bills 26,669,922 - - 1,900 26,671,822 15,656,805 - - (250 ) 15,656,555 Pakistan Investment Bonds 18,811,285 - - (508,506 ) 18,302,779 44,785,633 - - 433,514 45,219,147 45,481,207 - - (506,606 ) 44,974,601 60,442,438 - - 433,264 60,875,702 Shares: Listed 1,055,442 (107,346 ) (94,852 ) 853,244 949,712 (7,420 ) (89,614 ) 852,678 Unlisted 20,500 (10,500 ) - - 10,000 20,500 (10,500 ) - - 10,000 1,075,942 (117,846 ) (94,852 ) 863,244 970,212 (17,920 ) (89,614 ) 862,678 Non Government Debt Securities Listed 1,669,004 - - (13,005 ) 1,655,999 1,123,857 - - 5,806 1,129,663 Unlisted 495,978 - - 31,548 527,526 50,090 - - (31 ) 50,059 2,164,982 - - 18,543 2,183,525 1,173,947 - - 5,775 1,179,722 Total Investments 48,722,131 (117,846 ) (582,915 ) 48,021,370 62,586,597 (17,920 ) 349,425 62,918,102

Cost / Amortised

cost

Provision for diminution

Surplus / (Deficit)

CarryingValue

2017Cost /

Amortised cost

Provision for diminution

Surplus / (Deficit)

CarryingValue

57

58

20172018

9.2.1 Investments given as collateral

Market Treasury Bill 15,335,698 5,647,000 Pakistan Investment Bonds 8,562,578 32,745,228 23,898,276 38,392,228

9.3 Provision for diminution in value of investments

9.3.1 Opening balance 17,920 34,686

Charge / reversals Charge for the year 100,060 - -

Reversals for the year - - - - Reversal on disposals (134 ) (16,766 ) 99,926 (16,766)

Closing balance 117,846 17,920

9.3.2 No provision was booked against investment in debt securities as at December 31, 2018 (2017: Nil).

(Rupees in ‘000)

2017Cost

2018

9.4 Quality of available for sale securities

Details regarding quality of Available for Sale (AFS) securities are as follows:

Federal Government Securities - Government guaranteed Market Treasury Bills 20,625,794 14,162,143 Pakistan Investment Bonds 13,892,724 39,810,336 34,518,518 53,972,479 Shares Listed Companies - sector wise exposure Cable & Electrical Goods 56,589 92,007 Cement 35,486 60,939 Chemical 4,128 4,261 Commercial Banks 271,203 154,600 Engineering - - 87,154 Fertilizer - - 112,923 Food & Personal Care Products - - 17,368 Glass & Ceramics 49,628 - - Investment Banks 285 285 Modarabas 104 104 Oil & Gas Exploration Companies 62,711 - - Oil & Gas Marketing Companies 129,949 24,297 Power Generation & Distribution 304,767 282,794 Real Estate Investment Trust 82,894 66,246 Textile Composite 57,686 46,722 Transport 12 12 1,055,442 949,712

(Rupees in ‘000)

(Rupees in ‘000) (Rupees)

2018

Cost Breakup value per share

2017 2018 2017

Unlisted Companies

Crescent Industrial Chemical Limited 10,000 10,000 (0.54) (0.13)

Pak Asian Fund 10,000 10,000 16.84 16.84

Union Communication Private Limited 500 500 6.86 6.86 20,500 20,500

20172018

(Rupees in ‘000)

(Rupees in ‘000)

Cost

20172018

Non Government Debt Securities

Listed Categorised based on long term rating by Credit Rating Agency

- AAA 1,246,895 750,000 - AA+, AA, AA- 247,109 148,857 - A+, A, A- 175,000 225,000 1,669,004 1,123,857

Unlisted Categorised based on long term rating by Credit Rating Agency

- AA+, AA, AA- 495,978 50,090 495,978 50,090

9.4.1 The Bank has nil investment in foreign securities under Available for Sale category as at December 31, 2018 (December 31, 2017: nil).

9.5 Particulars relating to Held to Maturity securities are as follows:

Federal Government Securities - Government guaranteed

Pakistan Investment Bonds 4,918,561 4,975,297

9.5.1 The market value of securities classified as held to maturity as at December 31, 2018 amounted to Rs. 4,447 million (December 31, 2017: Rs. 5,184 million).

9.5.2 Investments include certain approved / Government securities which are held by the Bank to comply with the statutory liquidity requirements determined on the basis of the Bank's demand and time liabilities as set out under the Banking Companies Ordinance, 1962.

Cost

59

60

(Rupees in ‘000)

2017

TotalNon PerformingPerforming

20182017201820172018

Note

10.1 Includes net investment in finance lease as disclosed below:

2018 2017 Later than Later than Not later one and Over five Not later one and Over five than one less than years Total than one less than years Total year five years year five years

Lease rentals receivable 199,225 - - 199,225 279,498 - - 279,498 Residual value 35,647 - - 35,647 35,808 - - 35,808 Minimum lease payments 234,872 - - 234,872 315,306 - - 315,306 Financial charges for future periods (1,292) - - (1,292) (1,292) - - (1,292) Present value of minimum lease payments 233,580 - - 233,580 314,014 - - 314,014

(Rupees in ‘000)

10. ADVANCES - NET

Loans, cash credits, running finances, etc. 10.1 52,801,469 39,205,123 2,376,735 2,320,254 55,178,204 41,525,377 Islamic financing and related assets - - - - - - - - - - - - Bills discounted and purchased 698,082 961,689 15,494 15,494 713,576 977,183 Advances - gross 53,499,551 40,166,812 2,392,229 2,335,748 55,891,780 42,502,560 Provision against advances

- Specific - - - - (2,249,583 ) (2,303,292 ) (2,249,583 ) (2,303,292 ) - General (49,942 ) (17,495 ) - - - - (49,942 ) (17,495 ) (49,942 ) (17,495 ) (2,249,583 ) (2,303,292 ) (2,299,525 ) (2,320,787 ) Advances - net of provision 53,449,609 40,149,317 142,646 32,456 53,592,255 40,181,773

(Rupees in ‘000)

20172018

2018 2017 Category of Classification

Domestic Substandard 219,399 108,541 604 151

Doubtful - - - - - - - - Loss 2,172,830 2,141,042 2,335,144 2,303,141 2,392,229 2,249,583 2,335,748 2,303,292

10.3.1 The Bank has not extended any loans or advances overseas.

(Rupees in ‘000)

10.2 Particulars of advances - gross

In local currency 52,574,145 40,215,043 In foreign currencies 3,317,635 2,287,517 55,891,780 42,502,560

10.3 Advances include Rs. 2,392 million (2017 Rs. 2,336 million) which have been placed under non-performing status as detailed below:

Non Performing Loans Provision

Non Performing Loans Provision

(Rupees in ‘000)

20172018Note

(Rupees in ‘000)

20172018

(Rupees in ‘000)

20172018Note

10.5 Particulars of write offs

10.5.1 Against provisions 10.4 3,854 4,072

Directly charged to profit and loss account 27 - -

3,881 4,072

10.5.2 Write offs of Rs. 500,000 and above 10.6

- Domestic 2,628 626

- Overseas - - - -

Write offs of below Rs. 500,000 1,226 3,446

3,854 4,072

10.6 Details of loan write off of Rs. 500,000/- and above

In terms of sub-section (3) of Section 33A of the Banking Companies Ordinance, 1962 the statement in respect of written off loans or

any other financial relief of five hundred thousand rupees or above allowed to a person during the year ended December 31, 2018 is

given in Annexure-I to these financial statements. These loans are written off as a book entry without prejudice to the Bank's right of

recovery against the customers.

10.4 Particulars of provision against advances

Specific General Total Specific General Total

Specific General Total Specific General Total

Opening balance 2,303,292 17,495 2,320,787 2,092,064 105,908 2,197,972 Charge for the year 238,972 32,447 271,419 246,582 16,162 262,744 Reversals (288,827 ) - - (288,827 ) (31,282 ) (104,575 ) (135,857 ) (49,855 ) 32,447 (17,408 ) 215,300 (88,413 ) 126,887 Amounts written off 10.5 (3,854 ) - - (3,854 ) (4,072 ) - - (4,072 ) Closing balance 2,249,583 49,942 2,299,525 2,303,292 17,495 2,320,787

In local currency 2,249,583 49,942 2,299,525 2,303,292 17,495 2,320,787 In foreign currencies - - - - - - - - - - - - 2,249,583 49,942 2,299,525 2,303,292 17,495 2,320,787

10.4.1 Particulars of provisions against advances

10.4.2 No benefit of forced sale value of the collaterals held by the Bank has been taken while determining the provision against non performing loans as allowed under BSD circular No. 01 dated October 21, 2011.

10.4.3 General provision as at December 31, 2018 includes provision of Rs. 49.942 million (2017: Rs. 17.495 million) held against consumer finance portfolio as required by the Prudential Regulations issued by the State Bank of Pakistan.

61

62

2017(Restated)

2018Note

(Rupees in ‘000)11. FIXED ASSETS

Capital work-in-progress 11.1 60,620 11,970 Property and equipment 11.2 1,003,943 1,101,278 1,064,563 1,113,248 11.1 Capital work-in-progress

Civil works 27,155 4,890 Equipment 2,609 1,204 Advances to suppliers 30,856 11,066 60,620 17,160

11.2 Property and equipment

(Rupees in ‘000)

Freeholdland

Building on Freehold land

Furniture and fixtures Vehicles Total

Electrical, office and computer

equipment

2018

At January 1, 2018 Cost 502,240 174,517 611,686 750,624 44,348 2,083,415 Accumulated depreciation - - (84,731 ) (359,484 ) (515,838 ) (22,084 ) (982,137 ) Net book value 502,240 89,786 252,202 234,786 22,264 1,101,278 Year ended December 2018 Opening net book value 502,240 89,786 252,202 234,786 22,264 1,101,278 Additions - - - - 33,884 26,314 17,150 77,348 Disposals / write-offs - - - - (2,149 ) (8 ) (8,593 ) (10,750 ) Depreciation charge - - (7,575 ) (59,508 ) (91,837 ) (5,013 ) (163,933 ) Other adjustments / transfers - - (1,281 ) 1,281 - - - - - - Closing net book value 502,240 80,930 225,710 169,255 25,808 1,003,943 At December 31, 2018 Cost 502,240 173,236 629,538 776,714 39,466 2,121,194 Accumulated depreciation - - (92,306 ) (403,828 ) (607,459 ) (13,658 ) (1,117,251 ) Net book value 502,240 80,930 225,710 169,255 25,808 1,003,943 Rate of depreciation (percentage) - - 5 5 / 10 / 20 20 / 33 / 50 20

(Rupees in ‘000)

Freeholdland

Building on Freehold land

Furniture and fixtures Vehicles Total

Electrical, office and computer

equipment

2017

At January 1, 2017 Cost 375,180 139,799 591,607 664,775 44,800 1,816,161 Accumulated depreciation - - (77,327 ) (323,033 ) (462,218 ) (17,652 ) (880,230 ) Net book value 375,180 62,472 268,574 202,557 27,148 935,931 Year ended December 2017 Opening net book value 375,180 62,472 268,574 202,557 27,148 935,931 Additions 119,060 20,746 44,322 131,823 86 316,037 Disposals / write-offs - - - - (2,451 ) (164 ) (183 ) (2,798 ) Depreciation charge - - (7,404 ) (58,243 ) (99,430 ) (4,787 ) (169,864 ) Other adjustments / transfers 8,000 13,972 - - - - - - 21,972 Closing net book value 502,240 89,786 252,202 234,786 22,264 1,101,278 At December 31, 2017 Cost 502,240 174,517 611,686 750,624 44,348 2,083,415 Accumulated depreciation - - (84,73 1) (359,484 ) (515,838 ) (22,084 ) (982,137 ) Net book value 502,240 89,786 252,202 234,786 22,264 1,101,278 Rate of depreciation (percentage) - - 5 5 / 10 / 20 20 / 33 / 50 20

11.2.1 The Bank does not hold any asset under finance lease as at December 31, 2018 (2017: Nil).

11.3 Disposal of fixed assets

The details of disposals of assets whose original cost or book value exceed one million rupees or two hundred and fifty thousand rupees respectively, whichever is lower, are given in Annexure - II.

Information relating to sale of fixed assets (otherwise than through regular auction) made to the chief executive officer, a director, an executive or a shareholder holding not less than ten percent of the voting shares of the Bank or any related party as required by SBP's BSD Circular No. 4 dated February 17, 2006 is also given in Annexure - II.

Note

20172018

(Rupees in ‘000)

2017(Restated)

2018

(Rupees in ‘000)

11.4 The gross carrying amount (cost) of fully depreciated assets that are still in use: Building on Freehold land 32,428 32,428

Electrical, office and computer equipment 428,138 339,832 Furniture and fixture 215,156 166,211 675,723 538,471

12. INTANGIBLE ASSETS

Capital work-in-progress 12.1 13,343 5,190 Intangible Assets 12.2 107,305 128,180 120,648 133,370 12.1 Capital work-in-progress

Advances to suppliers 13,343 5,190 12.2 Intangible Assets

At January 1

Cost 243,329 110,310 Accumulated amortisation and impairment (115,149 ) (75,280 ) Net book value 128,180 35,030

Year ended December 31 Opening net book value 128,180 35,030

Additions: - directly purchased 13,145 133,678

Amortisation charge (34,020 ) (40,528 ) Write offs - - - - Closing net book value 107,305 128,180

At December 31 Cost 256,474 243,329

Accumulated amortisation and impairment (149,169 ) (115,149 ) Net book value 107,305 128,180

Rate of amortisation (percentage) 20 / 14.28 20 / 14.28

Useful life 5 / 7 5 / 7

12.3 Intangible assets include licensing cost of Bank's core banking system having a carrying value of Rs. 70.547 million (2017: Rs. 84.657 million). The remaining amortisation period of this asset is 5 years (2017: 6 years).

12.4 The gross carrying amount (cost) of fully amortised assets that are still in use:

Intangible 73,471 45,198

63

64

2018

Deductible temporary differences on: - Deficit on revaluation of investments (122,314 ) - - 326,937 204,623 - Accelerated tax depreciation (12,740 ) 40,341 - - 27,601 - Provision against advances, off balance sheet etc. 582,950 (37,843 ) - - 545,107 - Minimum tax 92,005 (92,005 ) - - - - 539,901 (89,507 ) 326,937 777,331 Taxable temporary differences on:

- Net investment in finance lease (103,085 ) 26,521 - - (76,564 )

436,816 (62,986 ) 326,937 700,767

(Rupees in ‘000)

At January 1, 2018Recognised in profit

and loss accountRecognised in

OCI At December 31, 2018

13. DEFERRED TAX ASSETS - NET

14. OTHER ASSETS - NET

2017

Deductible temporary differences on: - Tax losses carried forward 252,952 (252,952 ) - - - -

- Provision against advances, off balance sheet etc. 571,538 11,412 - - 582,950 - Minimum tax - - 92,005 - - 92,005 824,490 (149,535) - - 674,955 Taxable temporary differences on:

- Surplus on revaluation of investments (310,873 ) - - 188,559 (122,314 ) - Accelerated tax depreciation (3,454 ) (9,286 ) - - (12,740 ) - Net investment in finance lease (100,522 ) (2,563 ) - - (103,085 ) (414,849 ) (11,849 ) 188,559 (238,139 ) 409,641 (161,384) 188,559 436,816

(Rupees in ‘000)

At January 1, 2017Recognised in profit

and loss accountRecognised in

OCI At December 31, 2017

14.1 This includes: (a) An amount of Rs. 32.389 million (2017: Rs. 32.389 million) receivable from InterAsia Leasing Limited. (b) An amount of Rs. 1.065 million (2017: Rs. 3.177 million) receivable from Samba Financial Group - a related party.

Note 20172018

(Rupees in ‘000)

Income / mark-up accrued in local currency 1,523,068 1,722,708 Income / mark-up accrued in foreign currencies 72,969 34,410 Advances, deposits, advance rent and other prepayments 213,865 161,168 Advance taxation (payments less provisions) 74,874 432,886 Mark to market gain on forward foreign exchange contracts 858,235 708,419 Acceptances 18 1,384,384 1,072,461 Others 14.1 210,847 273,532 4,338,242 4,405,584 Less: provision held against other assets 14.2 (173,466 ) (173,466 ) Other assets (net of provision) 4,164,776 4,232,118

(Restated)

20172018Note

(Rupees in ‘000)14.2 Provision held against other assets

Fee, commission and other receivables 80,535 80,535 Fraud losses 92,931 92,931 173,466 173,466

14.2.1 Movement in provision held against other assets

Opening balance 173,466 173,466 Charge for the year - - - - Closing balance 173,466 173,466 15 BILLS PAYABLE In Pakistan 877,017 686,692 16 BORROWINGS Secured Borrowings from the State Bank of Pakistan Under export refinance scheme 16.1 2,875,000 2,625,000 Under long term financing facilities 16.2 1,111,696 473,055 3,986,696 3,098,055 Bai muajjal borrowing 16.3 8,457,762 10,055,213 Repurchase agreement borrowings 16.4 20,325,109 28,045,894 32,769,567 41,199,162 Unsecured Call borrowings 16.5 4,000,000 4,979,970 Bai muajjal borrowing 16.3 2,988,700 - - Bankers Equity Limited (under liquidation) 16.6 22,336 22,336 7,011,036 5,002,306

39,780,603 46,201,468

16.1 The Bank has entered into various agreements with the SBP for extending export finance to customers. As per the terms of the agreements, the Bank has granted the SBP the right to recover the outstanding amount from the Bank at the time of maturity of finances by directly debiting the current account maintained with the SBP. This facility is secured against demand promissory note executed in favor of the SBP. These borrowings carry mark-up at the rate ranging from 1.0% to 2.0% (2017: 2.0%) per annum, and have maturity period of upto six months from deal date (2017: six months).

16.2 These represent borrowing from the SBP to provide refinance to customers and carries mark-up at the rate of 2.0% to 3.5% (2017: 2.0%) per annum

and will mature latest by August 6, 2028 (2017: December 26, 2027).

16.3 This represents funds borrowed against government securities and carries mark-up at the rate ranging from 6.04% to 10.05% (2017: 5.73% to 5.75%) per annum and will mature latest by March 07, 2019 (2017: January 19, 2018).

16.4 This represents funds borrowed from interbank market against government securities and carries mark-up at the rate ranging from 8.45% to 10.40% (2017: ranging from 5.85% to 5.90%) per annum and will mature by January 04, 2019 (2017: January 12, 2018).

16.5 This represents funds borrowed from interbank market. These carry mark-up at the rate 10.00% (2017: 5.80% to 5.85%) per annum and will mature latest by January 02, 2019 (2017: January 18, 2018).

16.6 This represents amount payable to Bankers Equity Limited (under liquidation) on account of counter receivable from InterAsia Leasing Limited (note 14.1) and carries no mark-up.

65

66

20172018Note

(Rupees in ‘000)17.1 Composition of deposits

- Individuals 19,911,324 18,743,201 - Government (Federal and Provincial) 10,368,263 2,827,563 - Public sector entities 232,519 3,883,479 - Banking companies 17.1.1 92,765 234,907 - Non-banking financial institutions 4,101,947 3,031,996 - Private sector 30,518,234 26,180,318 17.1.2 65,225,052 54,901,464

20172018

(Rupees in ‘000)16.7 Particulars of borrowings with respect to currencies

In local currency 39,780,603 46,201,468 In foreign currencies - - - - 39,780,603 46,201,468

17 DEPOSITS AND OTHER ACCOUNTS(Rupees in ‘000)

2018 2017

In Local Currency

In Local Currency

In Foreign currencies

In Foreign currencies

Total Total

Customers Current deposits 12,770,433 3,511,613 16,282,046 9,463,513 2,787,710 12,251,223 Savings deposits 15,134,845 2,109,414 17,244,259 15,721,143 1,829,212 17,550,355 Term deposits 25,509,201 1,712,335 27,221,536 20,658,123 969,720 21,627,843 Others 282,499 - - 282,499 205,140 - 205,140 53,696,978 7,333,362 61,030,340 46,047,919 5,586,642 51,634,561 Financial Institutions Current deposits 293,869 - - 293,869 195,696 - 195,696 Savings deposits 1,865,078 - - 1,865,078 1,083,300 - 1,083,300 Term deposits 1,943,000 - - 1,943,000 1,753,000 - 1,753,000 Others (Note 17.1.1) 92,765 - - 92,765 234,907 - 234,907 4,194,712 - - 4,194,712 3,266,903 - 3,266,903 57,891,690 7,333,362 65,225,052 49,314,822 5,586,642 54,901,464

17.1.1 This includes deposits amounting to Rs. 92.74 million (2017: Rs. 234.88 million) from Samba Financial Group - a related party. 17.1.2 This includes eligible deposits to be covered under insurance arrangements amounting to Rs. 15,112 million (2017: Rs. 9,983 million).

20172018Note

(Rupees in ‘000)18 OTHER LIABILITIES

Mark-up / return / interest payable - in local currency 1,039,338 971,956 - in foreign currencies 9,496 7,861 Accrued expenses 486,435 539,868 Acceptances 14 1,384,384 1,072,461 Unclaimed dividends 3,429 4,255 Mark to market loss on forward foreign exchange contracts 763,999 706,312 Provision against off-balance sheet obligations 18.1 172,746 186,876 Security deposits against lease 34,997 35,158 Others 203,336 200,943 4,098,160 3,725,690

18.1.1 This includes:

a) A provision of Rs. 71.134 million (2017: Rs. 71.134 million) made in respect of two counter guarantees amounting to Rs. 71.134 million issued by Crescent Investment Bank Limited, an amalgamated entity, on behalf of Mr. Reyaz Shafi favoring Privatization Commission of Pakistan (PC). The PC had invoked/called for payment of both the guarantees prior to their expiry date. However, Mr. Reyaz Shafi had obtained stay order for payments against the guarantees on the grounds that the guarantees were conditional and the condition had not been met. Subsequently, the PC filed a suit against Faysal Bank Limited and Al-Baraka Islamic Bank, the guarantees issuing banks, against counter guarantees of the amalgamated entity, in the Lahore High Court under the Privatization Commission Ordinance, 2000 for payment against the guarantees. The case is still pending for decision. As a matter of prudence, full provision

of Rs. 71.134 million (2017: Rs. 71.134 million) was made by the amalgamated entity, in respect of this matter, which isbeing maintained.

b) A 50% provision is maintained amounting to Rs. 52.762 million (2017: Rs. 52.762 million) in respect of a guarantee issued by the

bank in favour of a gas utility company on behalf of Dewan Cement Limited. The amount of guarantee will be payable by the bank if and when a call is made upon the bank by the beneficiary, in case of a default by the company. The company has shown gradual and visible improvement in the affairs of it's business, hence, after obtaining necessary approval from SBP, the account was upgraded from Loss to Doubtful in 2012 and accordingly, 50% of the provisioning was reversed. Currently, provisioning of Rs. 52.762 million (2017: Rs. 52.762 million) is being maintained.

c) A provision of Rs. 48 million (2017: Rs. 48 million) in respect of a fraud and forgery claim. The matter is still under investigation and is sub judice. The management is confident that the case will be settled in the favour of the Bank. However, as a matter of prudence, a provision has been retained in the financial statements.

20172018Note

(Rupees in ‘000)18.1 Provision against off-balance sheet obligations

Opening balance 186,876 186,876 Charge for the year - - - - Reversals (14,130) - - Closing balance 18.1.1 172,746 186,876

(Restated)

67

68

20172018

(Rupees in ‘000)

20172018

(Number of Shares)

19. SHARE CAPITAL

19.1 Authorised capital

1,500,000,000 1,500,000,000 Ordinary shares of Rs. 10 each 15,000,000 15,000,000

20172018

(Rupees in ‘000)

20172018

(Number of Shares)

19.2 Issued, subscribed and paid-up capital

Ordinary shares 883,317,458 883,317,458 Fully paid in cash 8,833,175 8,833,175 Issued for consideration 124,921,190 124,921,190 other than cash 1,249,212 1,249,212 1,008,238,648 1,008,238,648 10,082,387 10,082,387

(Number of Shares)

19.2.1 Shares held by related parties of the Bank

Directors, their spouses and minor children Mr. Humayun Murad 1,281 1,281 Mr. Nadeem Babar 12,500,500 12,500,500 Mr. Shahbaz Haider Agha 500 500 Dr. Shujaat Nadeem 35,832,424 35,832,424 Mr. Arjumand Ahmed Minai 500 - - Mr. Shahid Sattar 1,154,800 1,288,300 49,490,005 49,623,005 Associated Companies, undertakings and related parties SAMBA Financial Group (SFG) 852,040,531 852,040,531 901,530,536 901,663,536

2018 2017

20172018Note

(Rupees in ‘000)20 (DEFICIT) / SURPLUS ON REVALUATION OF ASSETS

(Deficit) / surplus on revaluation of

- Available for sale securities 9.1 (584,638 ) 349,467

Deferred tax on (deficit) / surplus on revaluation of:

- Available for sale securities 13 204,623 (122,314)

(380,015 ) 227,153

20172018Note

(Rupees in ‘000)21. CONTINGENCIES AND COMMITMENTS

- Guarantees 21.1 5,265,382 3,905,702 - Commitments 21.2 54,645,121 76,068,264 - Other contingent liabilities 21.3 1,168,543 1,145,766 61,079,046 81,119,732 21.1 Guarantees Financial guarantees 17,772 - - Performance guarantees 4,116,102 3,229,935 Other guarantees 1,131,508 675,767 5,265,382 3,905,702 21.2 Commitments

Documentary credits and short-term trade-related transactions - letters of credit 5,553,494 4,681,621

Commitments in respect of: - forward foreign exchange contracts 21.2.1 40,336,037 69,222,818 - forward government securities transactions 21.2.2 6,043,511 301,458 - operating leases 21.2.3 2,462,369 1,691,555 48,841,917 71,215,831 Commitments for acquisition of: - operating fixed assets 8,842 15,718 - intangible assets 27,195 29,638 36,037 45,356 Other commitments 21.2.4 213,673 125,456 54,645,121 76,068,264 21.2.1 Commitments in respect of forward foreign exchange contracts

Purchase 21,127,740 35,488,350 Sale 19,208,297 33,734,468 40,336,037 69,222,818 21.2.2 Commitments in respect of forward government securities transactions

Purchase - - 301,458 Sale (6,043,511) - - (6,043,511) 301,458 21.2.3 Commitments in respect of operating leases

Not later than one year 270,693 180,174 Later than one year and not later than five years 1,134,776 785,697 Later than five years 1,056,900 725,684 2,462,369 1,691,555

These comprise of commitments in respect of leased premises that are under Bank’s use. The amount of commitment has been worked out based on standard rental arrangements between the Bank and the lessors, taking into account the terms of these arrangements.

(Restated)

69

70

20172018

(Rupees in ‘000)21.2.4 Other commitments

Claims against the Bank not acknowledged as debt 213,673 125,456

These represent various cases filed against the Bank for recovery of damages / settlement of deposit balances by various parties. Based on the legal advice, management believes that the possibility of any outcome against the Bank is remote and accordingly no provision has been made in these financial statements.

20172018

(Rupees in ‘000)

21.3 Other contingent liabilities 1,168,543 1,145,766

21.3.1 The income tax department has raised a demand of Rs. 426.787 million (2017: Rs. 426.787 million) for the assessment years 1995-96, 1996-97, 1999-00, 2001-02, 2002-03 on account of non-deduction of tax on profit paid under portfolio management scheme, interest paid on foreign currency deposits and certificates of investment. The department has also raised further demand of Rs. 645.337 million (2017: Rs. 645.337 million) for assessment years 1999-00,2000-01 to assessment year 2002-03 and tax year 2006 on account of taxability of investment banks as banking companies and taxation of dividend income as normal banking income, and on account of lease rentals received or receivable, lease key money and certain other items. The aforementioned relates to pending assessments of the Bank and amalgamated entities namely Crescent Investment Bank Limited, Trust Investment Bank Limited and Pakistan Industrial Leasing Corporation. Tax department has also raised demand of Rs. 29.052 million (2017: Rs. 29.052 million) for the assessment years 2009, 2010 & 2011 on account of Federal Excise Duty. Further, tax department has raised a demand of Rs. 16.480 million and Rs. 28.110 million on account of monitoring of withholding taxes for the tax years 2014 and 2015 respectively. Tax authorities have also issued order under Sindh Sales Tax on Services Act, 2011 for the year 2012 to 2017 thereby creating arbitrary aggregate demand of Rs. 22.777 million.

Presently, the Bank is contesting these issues at various appellate forums. The disallowances in respect of a number of assessment years have been decided / set aside by various appellate authorities for re-assessment while the Bank's appeal in respect of the remaining assessment years are currently pending. Based on the professional advice received from tax advisors, the management is confident that the eventual outcome of the aforementioned matters will be in favor of the Bank. Accordingly, no provision has been made in these financial statements in respect of the above mentioned demands aggregating Rs. 1,168.543 million (2017: Rs. 1,145.766 million) raised by the income tax authorities.

22 MARK-UP / RETURN / INTEREST EARNED

On:

(a) Loans and advances 3,814,977 2,074,648

(b) Investments 3,225,724 4,977,879

(c) Lendings to financial institutions 502,885 202,438

(d) Balances with banks 12,009 1,156

7,555,595 7,256,121

23 MARK-UP / RETURN / INTEREST EXPENSED

Deposits 2,748,881 2,277,310

Borrowings 2,032,251 2,559,547

Cost of foreign currency swaps against foreign currency deposits 66,032 59,976

4,847,164 4,896,833

24 FEE AND COMMISSION INCOME

Branch banking customer fees 34,939 26,393

Consumer finance related fees 17,357 5,315

Credit related fees 29,672 20,960

Investment banking fees 1,000 500

Commission on trade 65,452 45,463

Commission on guarantees 36,259 32,585

Commission on cash management 5,333 3,199

Commission on remittances including home remittances 34,337 23,293

Commission on bancassurance 37,561 43,131

Others 3,684 9,777

265,594 210,616

25 GAIN / (LOSS) ON SECURITIES

Realised 25.1 212,863 94,300

Unrealised - held for trading 9.1 1,723 (42 )

214,586 94,258

25.1 Realised gain on:

Federal Government Securities 180,338 7,934 Shares 32,525 86,366 212,863 94,300

26 OTHER INCOME Gain on sale of fixed assets - net 3,591 227,336 Others 152 15 3,743 227,351

20172018

(Rupees in ‘000)

Note

71

72

20172018

(Rupees in ‘000)

Note

27 OPERATING EXPENSES

Total compensation expense 1,255,145 1,114,475 Property expense Rent and taxes 244,712 233,730 Insurance 1,262 1,031 Utilities cost 62,414 61,910 Security (including guards) 42,021 30,479 Repair and maintenance (including janitorial charges) 20,722 18,847 Depreciation 7,575 7,404 378,706 353,401 Information technology expenses Software maintenance 40,243 40,626 Hardware maintenance 10,889 16,608 Depreciation 56,034 63,628 Amortisation 34,020 40,528 Network charges 52,859 51,971 Insurance 833 430 194,878 213,791 Other operating expenses Directors' fees and allowances 13,382 9,256 Legal and professional charges 10,224 18,797 Outsourced services costs 27.1 19,095 14,226 Travelling, conveyance and official entertainment 68,461 51,486 Charges paid to Central Depository Company of Pakistan Limited and NIFT 12,138 6,204 Depreciation 100,324 98,832 Training and development 4,505 4,435 Postage and courier charges 7,893 6,846 Communication 9,548 11,710 Stationery and printing 29,515 16,978 Repair and maintenance 35,162 31,838 Insurance 22,802 11,891 Marketing, advertisement and publicity 23,152 10,018 Group shared service cost - - (12,607 ) Fee commission and brokerage paid 27,091 32,327 Donations 27.2 7,459 4,300 Auditors remuneration 27.3 11,162 11,226 Others 28,123 13,614 430,036 341,377 2,258,765 2,023,044 27.1 This represents cost of material outsourcing arrangement with Euronet Pakistan (Private) Limited, amounting to Rs. 19.095 million (2017: Rs. 14.226 million). Material outsourcing arrangement shall have the same meaning as specified in Annexure-I of BPRD Circular No. 06 of 2017. This arrangement has been entered into for providing services related to hosting of ATM Switch and Card Management System.

20172018

(Rupees in ‘000)

20172018

(Rupees in ‘000)

Note

20172018

(Rupees in ‘000)27.2 Donations made during the year were as follows:

Daimer Bhasha & Mohmand Dams Fund 1,500 - - Indus hospital 1,417 1,540 Idara-e-taleem-o-agahi 1,400 1,000 The citizens foundation 840 390 Sharmeen khan memorial foundation 527 - - Pakistan red crescent society 500 - - Kiran foundation 500 850 World wide fund for nature, Pakistan 375 300 Karachi Down Syndrome Program 100 - - Special Olympics Pakistan 300 - - Children first the society - - 220 7,459 4,300

27.2.1 Directors, Sponsor shareholders or Key Management Personnel or their spouse do not have any interest in any of the Donees.

27.3 Auditors' remuneration

Statutory audit fee 2,346 2,182 Fee for annual group reporting 939 894 Fee for review of the the half year financial statements 505 481 Special certifications and others 6,376 6,743 Out-of-pocket expenses 996 926 11,162 11,226 28 WORKERS' WELFARE FUND

Under the Workers' Welfare Ordinance, 1971, the Bank has accrued Workers' Welfare Fund at 2% of profit before tax as per the financial statements or declared income as per the income tax return, whichever is higher.

The Bank has made full provision of Workers' Welfare Fund based on profit for the respective years.

The Supreme Court of Pakistan vide its order dated November 10, 2016 has held that the amendments made in the law introduced by

the Federal Government for the levy of Workers' Welfare Fund were not lawful. The Federal Board of Revenue has filed review petitions against this order which are currently pending.

Legal advice obtained on the matter indicates that consequent to filing of these review petitions, the judgement may not currently be treated as conclusive. Accordingly, the Bank maintains its provision in respect of WWF.

29 OTHER CHARGES

Penalties imposed by the State Bank of Pakistan 15,278 36

30 PROVISIONS AND WRITE OFFS - NET

(Provision) / reversal for diminution in the value of investments 9.3.1 (99,926 ) 16,766 Reversal / (provision) against loans and advances - net 10.4 17,408 (126,887 ) Fixed assets written off (2,111 ) (2,241 ) Reversal of provision against bad and doubtful other assets - net - - 9 Reversal of off balance sheet obligation 18.1 14,130 - - Bad debts written off directly 10.5 (27 ) - - Recoveries against debts written off 2,162 10,941 (68,364 ) (101,412 )

73

74

(Rupees in ‘000)

20172018

(Number of Shares)

(Rupees)

(Rupees in ‘000)

20172018

(Number of Shares)

(Rupees)

20172018

(Number)

31 TAXATION

Current (358,178 ) (136,306 )

Prior years (5,826 ) 105,615

Deferred (62,986 ) (161,384 )

(426,990 ) (192,075 )

31.1 Relationship between tax expense and accounting profit

Profit before taxation 1,109,719 930,928

Effects of:

- Tax calculated at the applicable rate of 35% (2017: 35%) 388,402 325,825

- Prior year charge 5,826 (105,615 )

- Permanent differences 5,405 - -

- Others including super tax at the rate of 4% (2017: 4%) of taxable profit 27,357 (28,135 )

Tax charge for the year 426,990 192,075

32 EARNINGS PER SHARE - BASIC AND DILUTED

Profit for the year 682,729 738,853

Weighted average number of ordinary shares 1,008,238,648 1,008,238,648

Basic earnings per share 0.68 0.73

32.1 Diluted Earnings Per Share

Profit for the year 682,729 738,853

Weighted average number of ordinary shares (adjusted

for the effects of all dilutive potential ordinary shares) 1,008,238,648 1,008,238,648

Diluted earnings per share 0.68 0.73

20172018Note

(Rupees in ‘000)

20172018

(Number)

33 CASH AND CASH EQUIVALENTS

Cash and balances with treasury banks 6 5,154,790 3,887,745 Balances with other banks 7 496,174 127,386 5,650,964 4,015,131

Permanent 543 500 On Bank contract 176 1 Bank's own staff strength at the end of the year 719 501

34 STAFF STRENGTH

37.1 Fair value of financial assets

The Bank measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making

the measurements:

Level 1: Fair value measurements using quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Fair value measurements using inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities,

either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Fair value measurements using input for the assets or liabilities that are not based on observable market data (i.e. unobservable inputs).

36.1 The Chief Executive Officer is provided with the use of Bank maintained car.

36.2 Executives include employees, other than the Chief Executive Officer and Directors, whose basic salary exceeds twelve hundred thousand rupees in a financial year.

37 FAIR VALUE MEASUREMENTS The fair value of quoted securities other than those classified as held to maturity, is based on quoted market price. Quoted securities

classified as held to maturity are carried at amortised cost. The fair value of unquoted equity securities, is determined on the basis of the break-up value of these investments as per their latest available audited financial statements.

The fair value of unquoted debt and equity securities, fixed term loans, other assets, other liabilities, fixed term deposits and borrowings cannot be calculated with sufficient reliability due to the absence of a current and active market for these assets and liabilities and reliable data regarding market rates for similar instruments.

34.1 In addition to the above, 118 (2017: 246) employees of outsourcing services companies were assigned to the Bank as at the end of the year to perform services other than guarding and janitorial services.

35 DEFINED CONTRIBUTION PLAN

The Bank operates a contributory provident fund plan for 514 employees (2017: 471 employees). Both employer and employees contribute 8.33% (2017: 8.33%) of the basic salaries to the fund every month. The expense charged in respect of this benefit is disclosed in note 27 to these financial statements.

36 COMPENSATION OF DIRECTORS AND EXECUTIVES (Rupees in ‘000)

2018 2017President and Chief Executive

Officer

Directors Executives

President and Chief Executive

Officer

Directors Executives

Fees - - 11,397 - - - - 8,931 - - Managerial remuneration 26,619 - - 222,332 24,387 - 191,527 Contribution to defined contribution plan 2,217 - - 18,167 2,031 - 15,280 Rent and house maintenance 11,978 - - 100,049 10,974 - 86,187 Utilities 2,662 - - 22,233 2,439 - 19,153 Medical 2,662 - - 22,233 2,439 - 19,153 Vehicle allowance - - - - 59,995 - - - 52,596 Bonus 43,000 - - 87,840 39,000 - 68,300 Conveyance - - - - 23 - - - 22 Other allowances 2,218 - - - - 2,032 - - - 91,357 11,397 532,872 83,302 8,931 452,217 Number of persons 1 4 94 1 4 80

75

76

The Bank's policy is to recognise transfers into and out of the different fair value hierarchy levels at the date the event or change incircumstances that caused the transfer occurred. There were no transfers between levels 1 and 2 during the year.

(a) Financial instruments in level 1 Financial instruments included in level 1 comprise of investments in listed ordinary shares.

(b) Financial instruments in level 2 Financial instruments included in level 2 comprises of Market Treasury Bills, Pakistan Investment Bonds, Term finance certificates and

Corporate Sukuks.

(c) Financial instruments in level 3 Currently, no financial instruments are classified in level 3.

Level 1 Level 2 Level 3 Total

(Rupees in '000)

2018

On balance sheet financial instruments

Financial assets - measured at fair value

Investments

Federal Government Securities - - 40,056,040 - - 40,056,040

Shares 853,244 - - - - 853,244

Non-Government Debt Securities - - 2,183,525 - - 2,183,525

Financial assets - disclosed but not measured at fair value

Investments - Federal Government Securities - - 4,447,416 - - 4,447,416

Off-balance sheet financial instruments - measured at fair value

Forward purchase of foreign exchange - - 21,127,740 - - 21,127,740

Forward sale of foreign exchange - - 19,208,297 - - 19,208,297

Forward sale of government securities - - 6,043,511 - - 6,043,511

Level 1 Level 2 Level 3 Total

(Rupees in '000)

2017

On balance sheet financial instruments

Financial assets - measured at fair value

Investments

Federal Government Securities - - 55,900,405 - - 55,900,405

Shares 852,678 - - - - 852,678

Non-Government Debt Securities - - 1,179,722 - - 1,179,722

Financial assets - disclosed but not measured at fair value

Investments - Federal Government Securities - - 5,183,574 - - 5,183,574

Off-balance sheet financial instruments - measured at fair value

Forward purchase of foreign exchange - - 35,488,350 - - 35,488,350

Forward sale of foreign exchange - - 33,734,468 - - 33,734,468

Forward purchase of government securities - - 301,458 - - 301,458

The table below analyses financial instruments measured at the end of the reporting period by the level in the fair value hierarchy into

which the fair value measurement is categorised:

Valuation techniques and inputs used in determination of fair values within level 1 and 2

Pakistan Investment Bonds / Market Treasury Bills

Fully Paid-up listed ordinary shares, Term finance certificates and corporate Sukuks

Fair values of Pakistan Investment Bonds and Market Treasury Bills are derived using the PKRV rates (Reuters page). These rates denote an average of quotes received from eight different pre-defined / approved dealers / brokers.

Fair value of investment in listed equity securities, term finance certificates and corporate sukuks are valued on the basis of available closing quoted market prices.

Forward foreign exchange contracts The fair value has been determined by interpolating the mid rates announced by the State Bank of Pakistan.

Item Valuation techniques and input used

38 SEGMENT INFORMATION

38.1 The segment analysis with respect to business activity is as follows:

Particulars Corporate Banking

Global Markets

RetailBanking

Commercial Banking Senoff Total

2018(Rupees in ‘000)

Profit and loss account

Net mark-up / return / interest income 2,134,868 1,662,815 (2,116,845 ) 1,001,118 26,475 2,708,431

Inter segment revenue - net (1,554,226 ) (1,411,417 ) 2,964,922 (689,126 ) 689,847 - -

Non mark-up / return / interest income 111,990 530,628 143,486 111,506 (130,891 ) 766,719

Total income 692,632 782,026 991,563 423,498 585,431 3,475,150

Segment direct expenses (124,496 ) (117,935 ) (949,287 ) (92,124 ) (1,013,225 ) (2,297,067 )

Inter segment expense allocation (246,089 ) (104,456 ) (523,118 ) (139,562 ) 1,013,225 - -

Total expenses (370,585 ) (222,391 ) (1,472,405 ) (231,686 ) - - (2,297,067 )

Provisions 199,649 (99,926 ) (32,447 ) (62,990 ) (72,650 ) (68,364 )

Profit before tax 521,696 459,709 (513,289 ) 128,822 512,781 1,109,719

Balance Sheet

Cash and bank balances - - 4,811,896 839,068 - - - - 5,650,964

Investments - net - - 48,021,370 - - - - - - 48,021,370

Net inter segment lending - - - - 47,663,897 - - 10,711,292 58,375,189

Lendings to financial institutions - - 9,449,244 - - - - - - 9,449,244

Advances - performing - net 33,707,299 1,163,180 1,805,858 16,052,297 720,975 53,449,609

Advances - non-performing - net 225,858 - - 24,279 62,990 (170,481) 142,646

Others 1,752,180 1,425,989 2,632 327,826 2,542,127 6,050,754

Total Assets 35,685,337 64,871,679 50,335,734 16,443,113 13,803,913 181,139,776

Borrowings 3,425,195 35,771,572 - - 561,500 22,336 39,780,603

Deposits and other accounts 8,823,351 148,724 49,048,376 7,204,601 - - 65,225,052

Net inter segment borrowing 22,226,786 27,560,864 - - 8,587,539 - - 58,375,189

Others 1,210,003 1,390,519 1,287,357 89,473 997,825 4,975,177

Total liabilities 35,685,335 64,871,679 50,335,733 16,443,113 1,020,161 168,356,021

Equity - - - - - - - - 12,783,755 12,783,755

Total equity and liabilities 35,685,335 64,871,679 50,335,733 16,443,113 13,803,916 181,139,776

Contingencies and commitments 7,500,030 46,379,548 3,240,030 2,487,638 1,471,800 61,079,046

77

78

Particulars Corporate Banking

Global Markets

RetailBanking

Commercial Banking Senoff Total

2017 (Restated)

(Rupees in ‘000)


Net mark-up / return / interest income 1,058,713 2,547,664 (1,736,322 ) 448,602 40,631 2,359,288

Inter segment revenue - net (746,916 ) (1,893,322 ) 2,344,302 (296,271 ) 592,207 - -

Non mark-up / return / interest income 83,018 295,471 126,832 73,455 136,370 715,146

Total income 394,815 949,813 734,812 225,786 769,208 3,074,434

Segment direct expenses (123,760 ) (106,101 ) (859,808 ) (52,558 ) (899,867 ) (2,042,094 )

Inter segment expense allocation (218,613 ) (83,493 ) (486,437 ) (111,324 ) 899,867 - -

Total expenses (342,373 ) (189,594 ) (1,346,245 ) (163,882 ) - - (2,042,094 )

Provisions (349,356 ) 16,766 (16,508 ) - - 247,686 (101,412 )

Profit before tax (296,914 ) 776,985 (627,941 ) 61,904 1,016,894 930,928

Balance Sheet

Cash and bank balances - - 2,953,794 1,061,337 - - - - 4,015,131

Investments - net - - 62,918,102 - - - - - - 62,918,102

Net inter segment lending - - - - 43,966,231 - - 10,752,685 54,718,916

Lendings to financial institutions - - 5,192,950 - - - - - - 5,192,950

Advances - performing - net 29,075,466 - - 775,764 9,554,803 743,284 40,149,317

Advances - non-performing - net 10,706 - - 21,750 - - - - 32,456

Others 781,599 2,030,780 467,476 512,536 2,123,161 5,915,552

Total Assets 29,867,771 73,095,626 46,292,558 10,067,339 13,619,130 172,942,424

Borrowings 2,660,055 43,081,076 - - 438,000 22,337 46,201,468

Deposits and other accounts 7,795,924 259,907 45,317,578 1,528,055 - - 54,901,464

Net inter segment borrowing 18,674,074 28,333,404 - - 7,711,438 - - 54,718,916

Others 737,717 1,421,238 974,980 389,847 888,600 4,412,382

Total liabilities 29,867,770 73,095,625 46,292,558 10,067,340 910,937 160,234,230

Equity - - - - - - - - 12,708,194 12,708,194

Total equity and liabilities 29,867,770 73,095,625 46,292,558 10,067,340 13,619,131 172,942,424

Contingencies and commitments 5,252,878 69,524,276 2,435,847 2,536,605 1,370,126 81,119,732

38.2 Segment details with respect to geographical locations The Bank does not have any overseas operations, therefore its entire geographical dispersion arises inside Pakistan.

39 TRUST ACTIVITIES

The Bank commonly acts as a trustee and in other fiduciary capacity that result in the holding or placing of assets on behalf of individuals, trust, retirement benefit plans and other institutions. These are not assets of the Bank and, therefore, are not included in the statement of financial position.

(Rupees in ‘000)

TotalPakistan

Investment Bonds

Total

2016 20172017 20182018

Market Treasury Bills

CategoryMarket

Treasury Bills

Pakistan Investment

Bonds

Number of IPS Accounts

Employee Funds 21 16 143,000 169,200 312,200 159,200 - - 159,200 Others 30 26 219,100 36,600 255,700 26,600 59,700 86,300 51 42 362,100 205,800 567,900 185,800 59,700 245,500

Securities Held (Face Value)

40. RELATED PARTY TRANSACTIONS

The Bank has related party relationships with its holding company, employee contribution plan, its directors and key management personnel.

The Banks enters into transactions with related parties in the ordinary course of business and on substantially the same terms as for comparable transactions with person of similar standing. Contributions to and accruals in respect of staff retirement benefits and other benefit plans are made in accordance with the actuarial valuations / terms of the contribution plan. Remuneration to the executives / officers is determined in accordance with the terms of their appointment.

Contributions to the contributory provident fund scheme are made in accordance with the terms of the contribution plan. Remuneration to the Chief Executive Officer and directors are disclosed in note 35 to these financial statements and are determined in accordance with the terms of their appointment.

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities

of the Bank. The Bank considers all members of its executive team, including the Chief Executive Officer to be key management personnel.

40.1 Details of transactions with related parties are given below:

2018

Balances with other banks In current accounts 17,434 - - - - - - - - Advances

Opening balance - - - - 151,147 - - - Addition during the year - - - - 24,172 - - Repaid during the year - - - - (28,909 ) - - Closing balance - - - - 146,410 - - Other Assets Other receivable 1,065 - - - - - -

(Rupees in '000)

Parent Company DirectorsKey management

personnelOther related

parties

2017



parties

Balances with other banks In current accounts 12,964 - - - - - - Advances

Opening balance - - - - 143,964 - - Addition during the year - - - - 28,847 - - Repaid during the year - - - - (21,664 ) - - Closing balance - - - - 151,147 - - - Other Assets Other receivable 3,177 - - - - - -

(Rupees in '000)

79

80

Deposits and other accounts Opening balance - - 15,434 22,440 50,455 Received during the year - - 78,847 404,885 310,296 Withdrawn during the year - - (63,163 ) (409,677 ) (298,786 )Closing balance - - 31,118 17,648 61,965

Vostro balances of Samba Financial Group 92,742 - - - - - -

Contingencies and Commitments Other contingencies 66,631 - - - - - -

Income

Mark-up / return / interest earned - - - - 7,428 - - Gain on sale of fixed assets - Annexure II - - - - 5 - - Expense Mark-up / return / interest paid - - 237 625 2,148 Insurance premium paid - - - - 1,249 - - Insurance claims settled - - - - 262 - -

(Rupees in '000)

Deposits and other accounts Opening balance - - 28,987 27,556 27,581 Received during the year - - 123,858 358,100 243,725 Withdrawn during the year - - (137,411 ) (363,216 ) (220,851 )Closing balance - - 15,434 22,440 50,455 Vostro balances of Samba Financial Group 234,884 - - - - - - Contingencies and Commitments Other contingencies 123,664 - - - - - - Income

Mark-up / return / interest earned - - - - 7,084 - - Gain on sale of fixed assets - Annexure II - - - - - - - - Expense Mark-up / return / interest paid - - 113 501 823 Insurance premium paid - - - - 1,232 - - Insurance claims settled - - - - 784 - -

(Rupees in '000)

2018



parties

2017 (Restated)



parties

2018READY / SPOT / TOM FORWARD

BUY SELL BUY SELLCURRENCY

40.2 Forex transactions during the year - Samba Financial Group

AED 4,407 2,755 - - - - EUR 17,250 15,410 1,600 8,960 GBP 9,503 39,080 28,916 6,590 JPY 367,220 16,299 143,312 103,913 SAR 299,832 675 - - - - USD 114,107 116,018 18,705 40,200 PKR - - 5,360,318 - - - -

(Currency in ‘000)






Forex deals outstanding as at the year - Samba Financial Group

EUR - - - - 500 100 GBP - - - - 1,900 200 JPY - - - - 39,647 - - USD - - - - 367 3,410





Forex deals outstanding as at the year - Samba Financial Group

EUR - - - - 300 - - GBP - - - - 1,150 300 USD - - - - 402 1,893

Forex transactions during the year - Samba Financial Group

AED - - 6,000 - - - - CAD - - - - - - - - CHF 60 - - 10 - - EUR 12,970 22,150 9,250 4,850 GBP 8,844 16,675 11,600 2,700 JPY 388,750 58,836 57,000 56,800 SAR 161,815 23,628 - - - - SGD - - - - - - - - USD 109,814 73,136 9,617 26,030 PKR - - 5,746,397 - - - -

81

82

The objective of managing capital is to safeguard the Bank's ability to continue as a going concern, so that it could continue to provide adequate returns to shareholders by pricing products and services commensurately with the level of risk. It is the policy of the Bank to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The impact of the level of capital on shareholders’ return is also recognised and the Bank recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantages and security afforded by a sound capital position.

The Bank’s Board and the management is committed to maintaining a sound balance between depositors' liability and shareholders' funds so that optimal capital / debt ratio is maintained. The optimal capital / debt ratio will provide reasonable assurance to depositor's about safety and security of their funds and at the same time provide impetus to the management to invest their depositors’ funds into profitable ventures without compromising the risk profile of the Bank. The capital requirement of the Bank has been determined based on the projected growth plan to be achieved in the next three to five years in all areas of business operations. Further, it also takes into account a road map for capital enhancement as directed by the SBP vide its various circulars issued from time to time.

The Banks are required to maintain Minimum Capital Requirement (MCR) as precribed by the State Bank of Pakistan through its BSD Circular No. 7 dated April 15, 2009 which required the minimum paid up capital (net of accumulated losses) to be raised to Rs. 10 billion by the year ended December 31, 2013. As at December 31, 2018 the Bank's Paid up Capital is Rs. 10.082 billion. In addition, the Banks are also required to maintain a minimum Capital Adequacy Ratio (CAR) of 11.90% of their risk weighted exposure. The Bank’s CAR as at December 31, 2018 is 19.04% (2017: 19.74%) of its risk weighted exposure.

41 CAPITAL ADEQUACY, LEVERAGE RATIO & LIQUIDITY REQUIREMENTS

(Rupees in ‘000)

20172018

AmountParticulars

Minimum Capital Requirement (MCR):

Paid-up capital (net of losses) 10,082,387 10,082,387

Capital Adequacy Ratio (CAR):

Eligible Common Equity Tier 1 (CET 1) Capital 12,663,107 12,274,067

Eligible Additional Tier 1 (ADT 1) Capital - - - -

Total Eligible Tier 1 Capital 12,663,107 12,274,067

Eligible Tier 2 Capital 49,942 219,661

Total Eligible Capital (Tier 1 + Tier 2) 12,713,049 12,493,728

Risk Weighted Assets (RWAs):

Credit Risk 57,494,392 48,202,997

Market Risk 3,784,082 10,082,763

Operational Risk 5,482,732 5,019,888

Total 66,761,206 63,305,648

Common Equity Tier 1 Capital Adequacy ratio 18.97% 19.39%

Tier 1 Capital Adequacy Ratio 18.97% 19.39%

Total Capital Adequacy Ratio 19.04% 19.74%

The Bank calculates capital adequacy ratio for credit risk, market risk and operational risk based upon the requirements under the Basel Accord as per the guidelines issued by the State Bank of Pakistan from time to time in this regard.

Major credit risk in respect of on and off-balance sheet exposures are mainly claims on banks, corporates, retail customers, residential mortgages and unquoted equity securities. Market risk exposures are mainly in fixed income securities and foreign exchange. The Bank’s potential risk exposures shall remain in these exposure types.

The Bank has taken into account credit risk, market risk, liquidity risk and operational risk when planning its assets.

The capital to risk weighted asset ratio, calculated in accordance with SBP guidelines on capital adequacy, under Basel III using Standardized Approach of Credit and Market Risk and Basic indicator Approach for Operational Risk is presented above.

(Rupees in ‘000)

20172018

AmountParticulars

Leverage Ratio (LR):

Eligible Tier-1 Capital 12,663,107 12,274,067

Total Exposures 119,449,382 125,555,664

Leverage Ratio 10.60% 9.78%

Liquidity Coverage Ratio (LCR):

Total High Quality Liquid Assets 20,748,795 27,963,934

Total Net Cash Outflow 6,730,607 10,617,941

Liquidity Coverage Ratio 308% 263%

Net Stable Funding Ratio (NSFR):

Total Available Stable Funding 87,875,142 44,206,819

Total Required Stable Funding 44,518,447 9,683,347

Net Stable Funding Ratio 197% 457%

41.1 Full disclosure is available at https://www.samba.com.pk/overviews/financial-reports.

83

84

42. RISK MANAGEMENT

Risk can be defined as a combination of the probability of an event and its consequences. In all types of undertakings, there is a potential for events

and consequences that constitute opportunities for benefit (upside) or threats to success (downside). Risk Management is increasingly recognised

as being concerned with both positive and negative aspects of risk. However, as a matter of prudence it is generally recognised that consequences

are only negative and therefore the management of risk is focused on prevention and mitigation of harm.

The types and degree of risk an organisation may be exposed to depends upon its size, complexity in business activities, volume etc. Unless risks

are assessed and measured it will not be possible to control risks. Further, an accurate assessment of risk gives management a clear view of the

Bank’s standing and helps in deciding future action plans. Management of risk by banks in Pakistan is governed by rules and regulations set by the

State Bank of Pakistan in its capacity as a Regulator of the banks.

The Bank maintains a dedicated Risk Management organisational unit, independent from any business and reporting directly to the President &

CEO through the Chief Risk Officer.

The Bank is exposed to a number of risks, such as credit, market, operational, liquidity, etc. The Board of Directors is ultimately responsible for the

risk management function. In order to find an appropriate balance between risk and the desired level of return, the Board has formed certain

specialised committees such as Integrated Risk Management Committee (IRMC), Management Credit Committee (MCC), Asset and Liability Committee

(ALCO) and Country Risk and Compliance Committee (CRCC) to manage these areas. These committees act within the Bank’s overall policies and

Board delegated authorities. Integrated Risk Management Committee is a management committee which reviews and monitors risks associated

with activities of specific areas. Country Risk and Compliance Committee provides senior management oversight on all material issues pertaining

to Operational Risk and Compliance. The Board Risk Committee oversees the risk management function, including credit risks, market risks, liquidity

risks and operational risks that can cause losses to the Bank, to ensure appropriate supervision and governance of the risk management function.

Board of Directors

Board Risk Committee

Internal Audit Risk Review

ManagementCredit Committee

Integrated Risk Management Committee

Corporate Credit Risk / Commercial / SME / FI

Consumer Risk

Operational Risk

Country Risk and Compliance Committee

Board Audit Committee

Market Risk / Middle Office / Basel III

Risk ManagementGroup

42.1 Credit Risk

Credit risk is the risk of loss as a result of failure by a client or counterparty to meet its contractual obligations. In the existing

operations of the Bank, this risk is inherent in loans, commitments to lend and contingent liabilities (such as letters of credit /

guarantees), in certain traded products and lending transactions.

The Bank seeks to manage its credit risk exposure by ensuring that its customers meet the minimum credit standards as per the

approved Credit Policy and procedures and through diversification of lending activities ensuring that there is no undue concentration

of risks with individuals, or within groups of customers in specific locations or businesses.

Taking credit risk is central to the business therefore the Bank continually and constantly assesses and monitors these exposures.

The inherent nature of the retail business warrants management of a large customer base with diversified product portfolios. Hence,

a system driven environment supplemented by human decision making and judgment, especially in unstructured markets is regarded

as the best tool to managing risk at large. Credit decisions are taken using a product program approach which includes local

environment knowledge, market competition and current best practices.

The corporate, commercial and SME portfolio is monitored through the Integrated Risk Management Committee (IRMC) which includes

senior members of the Risk Management Group. As far as Credit Risk Management is concerned, IRMC's responsibilities include:

- Oversee the Risk Management functions and ensure appropriate supervision and governance.

- Approval of risk rating methodologies and changes therein.

- Developing and maintaining highest standards of credit quality.

- Managing and ensuring that the overall credit risk exposures of the bank do not breach the pre-defined limits.

- Frequent reviewing, monitoring and evaluating the quality of credit portfolio.

The loans portfolio, which includes loans to individuals, corporate customers and commercial loans are significantly collateralized

by mortgage / hypothecation charges on fixed and current assets including property land, plant and equipment.

Loans and advances are classified as non-performing in accordance with the time based criteria specified in the Prudential Regulations

alongwith subjective judgmental criteria also applicable for early classification if needed. Provision is made against loans and

advances in accordance with the Bank's policies and guidelines provided by the State Bank of Pakistan (SBP).

The Board Risk Committee (BRC) also regularly monitors the overall Risk Portfolio of the Bank including Credit, Market and Operational

Risk.

The approved procedures define the Classified Credit process to be followed in order to establish a consistent approach to problem

recognition, problem labeling, remedial action, loan loss provisioning and the initiation of credit write-offs. Clear responsibilities are

defined pertaining to all processes that are required to be followed, in order to have an effective remedial management set-up

in place.

A Remedial Asset Committee comprising remedial and risk managers and President & CEO, under the initiative of the Institutional

Remedial Management Department, conducts regular reviews of the corporate credit classified portfolio and also recommends

recovery / work-out plans, waivers and write-offs.

The Bank follows a very stringent loan loss reserve policy and as a result the impaired portfolio of the Bank is almost fully

provisioned.

Particulars of Bank's significant on-balance sheet and off-balance sheet credit risk in various sectors are analysed as follows:

85

86

Gross lendingsCredit risk by public / private sector Non-performing lendings Provision held

2018 201720172017 20182018

42.1.1 Lendings to financial institutions

Public / Government 449,244 692,950 - - - - - - - -

Private 9,000,000 4,500,000 - - - - - - - -

9,449,244 5,192,950 - - - - - - - -

Gross investments Credit risk by industry sector Non-performing investments Provision held

2018 201720172017 20182018

42.1.2 Investment in debt securities

Chemical and pharmaceuticals 175,000 225,000 - - - - - - - -

Financial 1,239,982 198,947 - - - - - - - -

Investment in Pakistan Investment Bonds

and Treasury Bills 45,481,207 60,442,438 - - - - - - - -

Oil marketing and refinery 750,000 750,000 - - - - - - - -

47,646,189 61,616,385 - - - - - - - -

(Rupees in '000)

Gross investments Credit risk by public / private sector Non-performing investments Provision held

2018 201720172017 20182018

Public / Government 45,481,207 60,442,438 - - - - - - - -

Private 2,164,982 1,173,947 - - - - - - - -

47,646,189 61,616,385 - - - - - - - -

(Rupees in '000)

Gross advancesCredit risk by industry sector Non-performing advances Provision held

2018 201720172017 20182018

42.1.3 Advances

Agriculture, forestry, hunting and fishing 100,000 137,500 - - - - - - - -

Textile 9,133,953 7,395,423 523,224 186,815 412,797 183,888

Chemical and pharmaceuticals 4,163,547 2,236,473 672 672 569 569

Cement 1,423,919 649,824 - - - - - - - -

Sugar 4,098,518 3,996,662 18,591 218,240 18,591 218,240

Footwear and leather garments 2,706 527,766 2,706 2,706 1,806 1,806

Automobile and transportation equipment 520,015 - - - - - - - - - -

Electronics and electrical appliances 97,419 38,500 38,500 38,500 38,280 38,280

Construction 56,455 1,131,434 - - - - - - - -

Power (electricity), gas, water, sanitary 3,916,087 3,403,470 591,383 591,383 591,383 591,383

Wholesale and retail trade 1,725 1,725 1,725 1,725 1,725 1,725

Exports / Imports 10,024 10,024 10,024 10,024 10,024 10,024

Transport, storage and communication 3,079,029 3,081,040 7,373 7,373 7,373 7,373

Financial 1,150,907 829 829 829 566 566

Manufacturing 17,012,585 11,000,338 584,388 664,488 582,096 662,196

Paper and allied 162,206 130,935 1,452 1,452 1,452 1,452

Oil marketing and refinery 2,865,679 2,278,669 - - - - - - - -

Services 2,011,348 1,293,069 73 73 33 33

Individuals 3,078,997 2,026,839 500,071 498,973 527,749 496,905

Others 3,006,661 3,162,040 111,218 112,495 105,081 106,347

55,891,780 42,502,560 2,392,229 2,335,748 2,299,525 2,320,787

(Rupees in '000)

(Rupees in '000)

Gross advancesCredit risk by public / private sector Non-performing advances Provision held

2018 201720172017 20182018

Public / Government 2,865,679 2,728,669 - - - - - - - -

Private 53,026,101 39,773,891 2,392,229 2,335,748 2,299,525 2,320,787

55,891,780 42,502,560 2,392,229 2,335,748 2,299,525 2,320,787

(Rupees in '000)

20172018Credit risk by industry sector

(Rupees in ‘000)

42.1.4 Contingencies and Commitments

Chemical, lubricants and pharmaceuticals 294,992 690,083 Agriculture, forestry, hunting and fishing 305,640 357,305 Textile 1,435,599 1,014,289 Cement 296,543 113,695 Sugar 3,366 244,704 Footwear and leather garments - - 41,699 Automobile and transportation equipment 638,631 253,053 Construction 1,463,006 1,473,147 Wholesale and retail trade 27,229 15,000 Financial 47,658,294 69,714,696 Insurance 694,310 552,086 Electronics and electrical appliances 869,263 476,900 Power (electricity), gas, water and sanitary 1,243,800 1,224,228 Individuals - - 35,333 Manufacturing 792,822 128,972 Transport, storage and communication 95,035 18,189 Services 341,082 133,962 Paper and allied - - 37,034 Oil Marketing and Refinery 1,153,196 158,159 Others 3,766,238 4,437,198 61,079,046 81,119,732 Credit risk by public / private sector

Public / Government 1,719,890 597,222 Private 59,359,156 80,522,510 61,079,046 81,119,732

20172018

(Rupees in ‘000)

42.1.5 Concentration of Advances

42.1.5.1 The Bank's top 10 exposures on the basis of total (funded and non-funded exposures), aggregated to Rs. 14,290.46 million (2017: Rs. 12,345.90 million) and are as following:

42.1.5.2 The sanctioned limits against these top 10 exposures aggregated to Rs. 16,685.39 million (2017: Rs. 17,261.13 million).

42.1.5.3 The exposure as disclosed above is performing and thereby no provision has been maintained.

42.1.5.4 For the purpose of this note, exposure means outstanding funded facilities, utilised non-funded facilities and trade acceptances as at the reporting date.

Funded 9,327,960 7,997,482 Non Funded 4,962,501 4,348,420 Total Exposure 14,290,461 12,345,902

87

88

Disbursements mean the amounts disbursed by banks either in Pak Rupee or in foreign currencies against loans.

“Disbursements of province / region wise” refers to the place from where the funds are being issued by scheduled banks to

the borrowers.

“Utilization of province / region wise” refers to the place where the funds are being utilized by borrower.

42.2 Market Risk

The Bank is exposed to market risk which is the risk that the value of on and off-balance sheet exposures of the Bank will be adversely

affected by movements in market rates or prices such as interest rates, foreign exchange rates & equity prices, resulting in a loss to

earnings and capital.

42.2.1 Principal sources of Market Risks in both Trading Book and Banking Book

Price Risk

Price risk is the risk that there may be a financial loss as a result of change in the level or volatility of interest rates, foreign exchange

rates and commodity or equity prices.

Liquidity Risk

Liquidity risk is the risk that any bank, business and its entities, will be unable to meet a financial commitment when due.

Differentiation between Trading and Banking Book

Trading Book

- Positions that are assumed to be held for short term.

- Securities are to be sold within 90 days from the date of their classification as held for trading under normal circumstances.

- They are marked-to-market (MTM) daily.

Banking Book

- Securities holding intention is for long term.

- Sale before maturity is permitted.

- Positions are Marked-to-market (MTM) periodically.

42.2.2 Market Risk Management

42.2.3 Objectives

Market risk is the risk to a bank's financial condition resulting from adverse movements in market prices. Accurately measuring a bank's

market risk requires timely information about the current market values of its assets, liabilities and off-balance sheet positions. Market

risk arises from factors such as changing interest rates and currency exchange rates, the liquidity of markets for specific commodities

or financial instruments and local or world political and economic events. All of these sources of potential market risk can affect the

value of the institution and should be considered in the market risk measurement process.

Management of market risk aims to control related risk exposure while ensuring that earnings commensurate with levels of risk.

The Bank has approved market risk policy encompassing market risk limit framework where all relevant market factors have been

identified and taken into consideration in the establishment of the independent market risk limit frameworks. The policy also articulates

standards for defining, measuring and communicating market risk.

The Bank has established quantitative limits related to market risk and has also set limits for the maximum amount of losses arising

from market activities as under:

42.2.4 Price Risk Management

Trading Book is controlled through:

- Factor Sensitivity and associated limits

- Value at Risk (VaR) limits

- Trading – Action triggers

Banking Book is controlled through:


- Sensitivity of bonds using DV01 limits

- Triggers – Simplified action triggers

DisbursementsProvince / region KPK including FATA

AJK including Gilgit-BaltistanBalochistanSindh IslamabadPunjab

Punjab 52,961,889 51,512,093 194,124 - - - - 1,255,672 - -

Sindh 36,761,403 8,548,048 26,816,216 684,926 708,491 3,617 105

KPK including FATA 12,037 - - - - 12,037 - - - - - -

Balochistan - - - - - - - - - - - - - -

Islamabad 257,414 - - 48,296 - - - - 209,118 - -

AJK including Gilgit-Baltistan - - - - - - - - - - - - - -

Total 89,992,743 60,060,141 27,058,636 696,963 708,491 1,468,407 105

(Rupees in '000)

Punjab 38,559,873 35,406,068 - - - - - - 3,153,805 - -

Sindh 36,583,729 5,173,831 25,908,100 824,553 4,666,799 9,516 930

KPK including FATA - - - - - - - - - - - - - -

Balochistan - - - - - - - - - - - - - -

Islamabad 109,119 - - - - - - - - 109,119 - -

AJK including Gilgit-Baltistan - - - - - - - - - - - - - -

Total 75,252,721 40,579,899 25,908,100 824,553 4,666,799 3,272,440 930

42.1.6 Advances - Province / Region-wise Disbursement & Utilization

2018Utilization

DisbursementsProvince / region KPK including FATA

AJK including Gilgit-BaltistanBalochistanSindh IslamabadPunjab

(Rupees in '000)

2017Utilization

Disbursements mean the amounts disbursed by banks either in Pak Rupee or in foreign currencies against loans.

“Disbursements of province / region wise” refers to the place from where the funds are being issued by scheduled banks to

the borrowers.

“Utilization of province / region wise” refers to the place where the funds are being utilized by borrower.

42.2 Market Risk

The Bank is exposed to market risk which is the risk that the value of on and off-balance sheet exposures of the Bank will be adversely

affected by movements in market rates or prices such as interest rates, foreign exchange rates & equity prices, resulting in a loss to

earnings and capital.

42.2.1 Principal sources of Market Risks in both Trading Book and Banking Book

Price Risk

Price risk is the risk that there may be a financial loss as a result of change in the level or volatility of interest rates, foreign exchange

rates and commodity or equity prices.

Liquidity Risk

Liquidity risk is the risk that any bank, business and its entities, will be unable to meet a financial commitment when due.

Differentiation between Trading and Banking Book

Trading Book

- Positions that are assumed to be held for short term.

- Securities are to be sold within 90 days from the date of their classification as held for trading under normal circumstances.

- They are marked-to-market (MTM) daily.

Banking Book

- Securities holding intention is for long term.

- Sale before maturity is permitted.

- Positions are Marked-to-market (MTM) periodically.

42.2.2 Market Risk Management

42.2.3 Objectives

Market risk is the risk to a bank's financial condition resulting from adverse movements in market prices. Accurately measuring a bank's

market risk requires timely information about the current market values of its assets, liabilities and off-balance sheet positions. Market

risk arises from factors such as changing interest rates and currency exchange rates, the liquidity of markets for specific commodities

or financial instruments and local or world political and economic events. All of these sources of potential market risk can affect the

value of the institution and should be considered in the market risk measurement process.

Management of market risk aims to control related risk exposure while ensuring that earnings commensurate with levels of risk.

The Bank has approved market risk policy encompassing market risk limit framework where all relevant market factors have been

identified and taken into consideration in the establishment of the independent market risk limit frameworks. The policy also articulates

standards for defining, measuring and communicating market risk.

The Bank has established quantitative limits related to market risk and has also set limits for the maximum amount of losses arising

from market activities as under:

42.2.4 Price Risk Management

Trading Book is controlled through:


- Value at Risk (VaR) limits

- Trading – Action triggers

Banking Book is controlled through:


- Sensitivity of bonds using DV01 limits

- Triggers – Simplified action triggers

Risk Officer Risk Manager

Head of Market Risk / Middle Office / Basel III Coordinator

42.2.5 Structure and Organisation of the market risk management

89

90

Trading results report

Quantitative risk monitoringConfirmation of contractsand agreements

Board of Directors / Executive team / ALCO / IRMC / BRC

Market Risk Reports

Middle Office(Market Risk Management)

Back Office

Front Office

Delegation of authority

42.2.6 Market Risk Management Function - Monitoring compliance with all the market risk management policies and procedures of the treasury function as approved by

the Board of Directors. - Identifying and specifying all relevant market factors for each risk-taking unit. - Monitoring the day-to-day dealings of the front office against the pre-determined tolerable limits. - Ensuring that the following are reflected in the periodic (at least quarterly) profit and loss account: - All transactions executed; and - Current independent market data used with respect to revaluation. - Dealer limits monitoring and excess reporting. - Random review of recorded telephone conversations for Global Market (GM) activities and related telephone recordings through

Voice recording system. - As per new Rate Reasonability Review Process document, any transaction outside the agreed tolerance band will be reviewed

and highlighted by Market Risk. - Review the factor sensitivity, VaR and stress testing methodologies and results for reasonableness, consistency and completeness. - Preparing forecasts (simulations) showing the effect of various possible changes in market conditions relating to risk exposures

and ensure their integrity. - Preparing Market Access Reports (MAR), maturity and interest rate risk GAP reports. - Preparing market risk dashboard for Asset Liability Committee (ALCO), Integrated Risk Management Committee (IRMC), Board

Risk Committee (BRC) and senior management. - Preparing GAP analysis report and reviewing methodologies to calculate risk under Pillar I and II of ICAAP Framework. - Preparing Business Continuity Program (BCP) for market risk. - Finalising methodologies to calculate risks under Pillar I & II for ICAAP Framework. - Jointly developing, with business, standard stress test scenarios and reviewing the standard stress test library at least annually. - Reviewing the Bank’s capital adequacy.

42.2.7 Scope and nature of Risk Reporting

- It is the policy of the Bank that a comprehensive set of market risk data, generated through the businesses’ risk-taking

activities, is identified and communicated throughout the applicable business, IRMC and Senior Management.

- It is the responsibility of Market Risk Management to define, construct and maintain an independent market risk reporting framework that effectively, consistently and meaningfully communicates risks, risk appetite and the quality of

earnings.

- At a minimum, market risk reports are produced for each risk-taking unit, consistent with the level at which the independent market risk limit frameworks are established. However, additional market risk reports may be produced if Market Risk Management determines that the level and / or nature of the risk within a business, warrant inclusion in the market risk reporting packages.

- The market risk data and other data used to populate the independent market risk reports should be from independent risk systems or other independent support systems (e.g. general ledger). If the information available in the independent systems is not sufficiently comprehensive, any other data used to populate the reports must be subject to a reconcilement process to ensure its integrity.

- It is the responsibility of Market Risk Management and the business to assist in the quality control process by reviewing the reports for reasonableness, consistency and completeness.

42.2.8 Market Risk Management System

The Bank has Market risk software to manage the market risks from its trading and non-trading activities.

At each level, checks and balances are maintained through a system in which back and middle offices operate independently from front offices. In addition, ALCO, IRMC and BRC meetings are held respectively every month / quarter to deliberate important matters related to market risk and control.

42.2.9 Market Risk Measurement Model Since daily variation in market risk is significantly greater than other types of risk, the Bank measures and manages market risk

using VaR on a daily basis.

Market risk for trading and non-trading activities is measured using a uniformed market risk measurement model. The principal model used for these activities is Variance-Covariance matrix model (holding period, 10 days; confidence interval, 99%; and observation period 365 business days). The model calculates VaR amount by applying actual fluctuations in the market rates and prices over a fixed period in the past. However, the Bank is not using this model to calculate Basel III regulatory capital adequacy ratios which are being computed using the standardised approach which is in accordance with the regulatory requirement.

The Bank is using the following components for measuring market risk factors: - Factor Sensitivities - Volatility and Correlation Calculations - Value-at-Risk (VaR)

- Stress Testing

42.2.11 Foreign Exchange Risk The Foreign exchange risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

The risk is managed through State Bank of Pakistan’s forward covers and other hedging instruments. Overall foreign exchange risk is managed by dealing in authorised currencies, devising separate authority matrices for different types of foreign currencies transactions and assigning the ceilings of exposures to parties. Foreign exchange open and mismatch positions are controlled through internal limits and are marked to market on a daily basis to contain forward exposures.

42.2.10 Balance sheet split by trading and banking books

Bankingbook

Tradingbook Total

Bankingbook

Tradingbook Total

Cash and balances with treasury banks 5,154,790 - - 5,154,790 3,887,745 - - 3,887,745

Balances with other banks 496,174 - - 496,174 127,386 - - 127,386

Lendings to financial institutions 9,449,244 - - 9,449,244 5,192,950 - - 5,192,950

Investments - net 7,112,086 40,909,284 48,021,370 6,155,019 56,763,083 62,918,102

Advances - net 53,592,255 - - 53,592,255 40,181,773 - - 40,181,773

Fixed assets 1,064,563 - - 1,064,563 1,113,248 - - 1,113,248

Intangible assets 120,648 - - 120,648 133,370 - - 133,370

Deferred tax assets - net 700,767 - - 700,767 436,816 - - 436,816

Other assets - net 4,164,776 - - 4,164,776 4,232,118 - - 4,232,118

81,855,303 40,909,284 122,764,587 61,460,425 56,763,083 118,223,508

(Rupees in '000)

2018 2017

Assets LiabilitiesNet foreign

currency exposure

Off-balance sheet items

(Rupees in '000)

2018

Pakistan Rupee 117,046,609 (102,557,919 ) (1,919,329 ) 12,569,361 United States Dollar 5,384,210 (6,921,588 ) 1,585,254 47,876 Great Britain Pound Sterling 153,423 (404,652) 300,724 49,495 Euro 77,678 (43,151) (15,884) 18,643 Japanese Yen - - (48,101 ) 49,979 1,878 Other currencies 102,667 (5,421) (744) 96,502 122,764,587 (109,980,832) - - 12,783,755

91

42.2.12 Equity position Risk

Equity position risk in Trading Book arises due to changes in prices of individual stocks or levels of equity indices. Currently, the Bank's equity investments comprises of Available for Sale (AFS). The AFS portfolio is maintained with a medium-term view of capital gains and dividend income.

42.2.13 Yield / Interest Rate Risk in the Banking Book (IRRBB)-Basel II Specific

Interest Rate Risk (Banking Book) is the current or prospective risk to the earnings arising from the impact of adverse movements in interest rates on mismatches in asset-liability structure. It arises when:

- there is a mismatch in the maturity and re-pricing of assets and liabilities and off-balance sheet short and long term positions (re-pricing risk), - Following three shocks have been designed to assess the impact of an interest rate change. - Impact of Decrease in Interest Rate on Net Interest Income (NII) - Impact of Parallel Shift in the Yield Curve on the Market Value of Equity (MVE) - Impact of Movement in the Slope of Yield Curve on the Market Value of Equity (MVE)

92

Assets LiabilitiesNet foreign

currency exposure

Off-balance sheet items

(Rupees in '000)

2017

Pakistan Rupee 114,410,961 (99,878,917 ) (1,773,851 ) 12,758,193 United States Dollar 3,661,999 (5,348,244 ) 1,622,220 (64,025 ) Great Britain Pound Sterling 107,315 (225,749 ) 126,677 8,243 Euro 24,615 (62,073 ) 39,676 2,218 Japanese Yen 3,342 - - - - 3,342 Other currencies 15,276 (331) (14,722) 223 118,223,508 (105,515,314) - - 12,708,194

BankingBook

TradingBook

BankingBook

TradingBook

(Rupees in '000)

2018 2017

Impact of -1% change in foreign exchange rates on - Profit and loss account (3,197) - - (640) - - - Other comprehensive income - - - - - - - -

BankingBook

TradingBook

BankingBook

TradingBook

(Rupees in '000)

2018 2017

Impact of -5% change in equity prices on - Profit and loss account - - - - - - - - - Other comprehensive income - - (42,662 ) - - (42,634 )

BankingBook

TradingBook

BankingBook

TradingBook

(Rupees in '000)

2018 2017

Impact of -1% change in interest rates on - Profit and loss account (378,839) (451,109) (1,268,777) (579,560) - Other comprehensive income - - - - - - - -

42.2.14 Mismatch of Interest Rate Sensitive Assets and Liabilities

Bank's interest rate sensitivity position based on the earlier of contractual repricing or maturity date is as follows:

2018 Exposed to yield / interest rate risk

Effective

Over 6

Non-interest

yield/

Total Upto one Over 1 to Over 3 to months to

Over 1 to 2 Over 2 to Over 3 to Over 5 to Above bearing

interest month 3 months 6 months

1 year years 3 years 5 years 10 years 10 years

financial

rate

instruments

%

(Rupees in '000)

On-balance sheet financial instrumentsAssets Cash and balances with treasury banks 5,154,790 - - - - 1,113,950 - - - - - - - - - - - - 4,040,840 Balances with other banks 496,174 - - - - - - - - - - - - - - - - - - 496,174 Lending to financial institutions 7.59% 9,449,244 9,449,244 - - - - - - - - - - - - - - - - - - Investments - net 7.12% 48,021,370 11,611,169 20,216,764 4,531,380 496,613 5,930,974 1,181,786 1,066,849 2,122,592 - - 863,243 Advances - net 8.35% 53,592,255 8,485,355 30,101,633 6,822,484 4,474,678 325,673 423,221 1,407,497 1,409,068 - - 142,646 Other assets - net 4,164,776 - - - - - - - - - - - - - - - - - - 4,164,776 120,878,609 29,545,768 50,318,397 12,467,814 4,971,291 6,256,647 1,605,007 2,474,346 3,531,660 - - 9,707,679 Liabilities Bills payable 877,017 - - - - - - - - - - - - - - - - - - 877,017 Borrowings 6.23% 39,780,603 32,882,871 4,365,200 1,368,500 30,000 - - 15,893 102,037 993,766 - - 22,336 Deposits and other accounts 6.18% 65,225,052 6,719,480 9,924,086 25,860,466 5,450,177 143,776 135,946 39,942 - - - - 16,951,179 Liabilities against assets subject to finance lease - - - - - - - - - - - - - - - - - - - - - - Subordinated debt - - - - - - - - - - - - - - - - - - - - - -Other liabilities 4,098,160 - - - - - - - - - - - - - - - - - - 4,098,160 109,980,832 39,602,351 14,289,286 27,228,966 5,480,177 143,776 151,839 141,979 993,766 - - 21,948,692

On-balance sheet gap 10,897,777 (10,056,583) 36,029,111 (14,761,152) (508,886) 6,112,871 1,453,168 2,332,367 2,537,894 - - (12,241,013) Off-balance sheet financial instruments Documentary credits and short-termtrade-related transactions 5,553,494 2,318,289 2,925,081 310,124 - - - - - - - - - - - - - - Commitments in respect of: - forward foreign exchange contracts 40,336,037 16,491,863 16,866,422 6,977,752 - - - - - - - - - - - - - - - forward government securities transactions 6,043,511 6,043,511 - - - - - - - - - - - - - - - - - - Off-balance sheet gap 46,379,548 22,535,374 16,866,422 6,977,752 - - - - - - - - - - - - - -

Total Yield / Interest Risk Sensitivity Gap 24,853,663 19,791,503 7,287,876 - - - - - - - - - - - - - -

Cumulative Yield / Interest Risk Sensitivity Gap 14,797,080 55,820,614 (7,473,276) (508,886) 6,112,871 1,453,168 2,332,367 2,537,894 - - (12,241,013)

93

94

(Rupees in '000)

On-balance sheet financial instrumentsAssets Cash and balances with treasury banks 3,887,745 - - - - 830,669 - - - - - - - - - - - - 3,057,076 Balances with other banks 127,386 - - - - - - - - - - - - - - - - - - 127,386 Lending to financial institutions 5.99% 5,192,950 5,192,950 - - - - - - - - - - - - - - - - - - Investments - net 6.98% 62,918,102 16,340,018 2,051,060 - - 6,389,995 11,678,274 11,069,291 11,138,725 3,388,060 - - 862,679 Advances - net 6.77% 40,181,773 18,379,888 12,005,962 6,280,675 1,925,180 206,432 229,468 561,267 555,899 - - 37,002 Other assets - net 4,232,118 - - - - - - - - - - - - - - - - - - 4,232,118 116,540,074 39,912,856 14,057,022 7,111,344 8,315,175 11,884,706 11,298,759 11,699,992 3,943,959 - - 8,316,261 Liabilities Bills payable 686,692 - - - - - - - - - - - - - - - - - - 686,692 Borrowings 5.69% 46,201,468 43,081,077 1,787,000 838,000 - - - - - - 88,213 384,842 - - 22,336 Deposits and other accounts 5.39% 54,901,464 3,262,591 5,791,175 25,158,576 7,545,017 4,198 236,846 16,095 - - - - 12,886,966 Liabilities against assets subject to finance lease - - - - - - - - - - - - - - - - - - - - - - Subordinated debt - - - - - - - - - - - - - - - - - - - - - -Other liabilities 3,725,690 - - - - - - - - - - - - - - - - - - 3,725,690 105,515,314 46,343,668 7,578,175 25,996,576 7,545,017 4,198 236,846 104,308 384,842 - - 17,321,684

On-balance sheet gap 11,024,760 (6,430,812) 6,478,847 (18,885,232) 770,158 11,880,508 11,061,913 11,595,684 3,559,117 - - (9,005,423) Off-balance sheet financial instruments Documentary credits and short-termtrade-related transactions 4,681,621 1,954,328 2,465,857 261,436 - - - - - - - - - - - - - - Commitments in respect of: - forward foreign exchange contracts 69,222,819 30,821,685 30,814,960 7,586,174 - - - - - - - - - - - - - - - forward government securities transactions 301,458 301,458 - - - - - - - - - - - - - - - - - - Off-balance sheet gap 69,524,276 31,123,142 30,814,960 7,586,174 - - - - - - - - - - - - - -

Total Yield/Interest Risk Sensitivity Gap 33,077,471 33,280,817 7,847,610 - - - - - - - - - - - - - - Cumulative Yield/Interest Risk Sensitivity Gap 26,646,658 39,759,664 (11,037,622) 770,158 11,880,508 11,061,913 11,595,684 3,559,117 - - (9,005,423)

2017 Exposed to yield / interest rate risk

Effective

Over 6

Non-interest

yield/

Total Upto one Over 1 to Over 3 to months to

Over 1 to 2 Over 2 to Over 3 to Over 5 to Above bearing

interest month 3 months 6 months

1 year years 3 years 5 years 10 years 10 years

financial

rate

instruments

%

42.3 Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, errors or mistakes or frauds committed by

people, inadequate systems and from external events. The Bank has an Operational Risk Framework duly approved by the Board

which is reviewed after every three years. The Bank has a well developed Operational Risk System as defined under the Operational

Risk Framework, which is aligned to international best practices. The Bank is using Key Risk Indicators, Risk & Control Self - Assessment,

capturing Operational incidents and conducting Quality Assurance Reviews as tools for identification, monitoring, measuring and

management of operational risk. Key Risk Indicators and operational loss incidents are captured in the Operational Risk System.

A sound internal governance structure enhances the effectiveness of the Bank's Operational Risk Management and is accomplished

at the enterprise level through formal oversight by the Board, the Chief Risk Officer, the Operational Risk Head and risk management

committees.

The Bank has set up an Operational Risk Management Department (ORMD), housed within the Risk Management Group which is

entrusted with managing controls and processes in an efficient and effective manner. The Operational Risk Management Department

(ORMD) oversees the processes for sound operational risk management and also serves as an escalation point for critical operational

risk matters within the Bank. The ORMD reports operational risk activities to the Board Risk Committee and Bank's Integrated Risk

Management Committee (IRMC) that reviews all risk areas of the Bank, on a holistic basis. The main activities of ORMD include:

- Operational Risk Management

- Business Continuity Planning

- Fraud Risk Management

- Information Security

- Quality Assurance Reviews

- Whistle Blowing Unit

With respect to Basel III for Operational Risk, the bank currently uses the Basic Indicator Approach (BIA) for determining the Operational

charge for MCR calculation purposes.

Information and Cyber Security in all aspects remains a critical area of importance. To strengthen the Information Security-IS controls

for Bank’s information assets, the Bank has reviewed and updated the Information Security Policy & Framework, Procedures, Guidelines

and System’s Hardening standards based on latest ISO 27001 standard, PCI standards and regulatory requirements. The Bank is PCI

DSS compliant and conducts robust Penetration Testing and Vulnerability Scanning. All Applications and any technology enhancement

is reviewed by IS through a detailed Information Security Risk Assessment process. The Bank's staff are also regularly trained on

Information and Cyber Security aspects aside from monthly information security awareness email messages.

Business Continuity Management Program is aligned with international best practices and regulatory guidelines, reviewed and tested

to ensure the readiness and effectiveness of alternate sites arrangements during uncertain situations. BCM awareness training

sessions are also conducted for respective designated staff members to ensure that they are aware of their roles and responsibilities

in any disaster situation.

The Bank has well defined policies and procedures in place for each unit duly vetted by the management. The policies & procedures

are reviewed periodically to ensure that these are in line with all the relevant laws and regulations.

In addition to the above, institution wide operational risk, fraud risk and whistle blow awareness and trainings are being undertaken

through regular communications and training workshops.

42.4 Liquidity Risk

Liquidity Risk is the potential for loss to an institution arising from either its inability to meet its obligations or to fund increase in

assets as they fall due without incurring unacceptable cost or losses.

95

96

Liquidity risk is being monitored through the following:

(a) Gap Analysis: Market Access Report (MAR)

Market Access Report is a key tool in monitoring the current liquidity position of the Bank and it measures the ‘gaps’ over various

time horizons, based on a business-as-usual assumption that the asset levels remain constant. MAR quantifies the daily and cumulative

gap in a business-as-usual environment. The gap for any given tenor bucket represents the borrowings from, or placements to, the

markets (internal or external), required to replace maturing liabilities or assets. MAR Limits establish a boundary for how much

incremental funding is appropriate, relative to the size of statement of financial position and market capacity.

(b) Stress Scenario

Stress test is intended to quantify the likely impact of an event on the balance sheet and the net potential cumulative gap over a

3-months period, and to ascertain what incremental funding may be required under the defined stress scenario. The scenario is

proposed by the Market Risk Management at a minimum on an annual basis, endorsed by the Treasurer and approved by the Board

of Directors.

(c) Scope and nature of Risk Reporting

- It is the policy of the Bank that the comprehensive set of liquidity risk data, generated through the businesses’ risk-taking activities,

is identified and communicated throughout the applicable business, treasury and senior management.

- Market Risk is responsible to construct and maintain an independent liquidity risk-reporting framework that effectively, consistently

and meaningfully communicates risks and risk appetite.

- Treasurer is responsible to ensure the completeness and integrity of the liquidity risk data, and that the data can be effectively reported

into the independent risk systems.

- ALCO, the Treasurer and the market risk managers are responsible for assisting in the quality control process by reviewing the reports

for reasonableness, consistency and completeness.

(d) Mitigating Liquidity risk and processes for continuous monitoring

The following tools are being used in order to monitor the liquidity risk:

- Market Access Report (MAR)

- Stress Scenario

- Liquidity Ratios

- Significant Funding Sources (large funds providers)

- Contingency Funding Plans

42.4

.1 M

atur

ities

of a

sset

s an

d lia

bilit

ies

- bas

ed o

n co

ntra

ctua

l mat

urity

of t

he a

sset

s an

d lia

bilit

ies

of th

e Ba

nk

Asse

ts

Ca

sh an

d bala

nces

with

trea

sury

bank

s 5,1

54,79

0 5,1

54,79

0 -

-

-

-

-

-

-

-

-

-

-

- Ba

lance

s with

othe

r ban

ks

496,1

74

496,1

74

-

- -

- -

-

-

-

-

-

-

-

Lend

ing to

finan

cial in

stitut

ions

9,449

,244

9,449

,244

- -

- -

-

-

-

-

-

-

- -

Inves

tmen

ts - n

et 48

,021,3

70

- 10,

860,2

89

-

-

15,811

,534

-

-

496,6

13

863,2

43

5,930

,974

1,425

,337

1,994

,479

10,63

8,901

Ad

vanc

es - n

et 53

,592,2

55

21,89

2,861

3,5

40,18

4 55

0,665

2,0

74,42

6 2,2

09,59

6 3,4

46,04

1 6,8

22,48

5 517

,925

2,721,

831

890,9

69

1,256

,971

4,669

,589

2,998

,712

Fixed

asse

ts 1,0

64,56

3 -

-

- 50

7 -

586

2,405

-

8,6

25

73,76

7 67

,193

259,8

45

651,6

35

Intan

gible

asse

ts 120

,648

-

- -

58

-

66

273

- 97

8 8,3

60

7,615

29,44

8 73

,850

Defer

red ta

x asse

ts - n

et 70

0,767

-

-

-

-

-

-

-

-

219

,385

74,38

1 59

,505

93,75

7 25

3,739

Ot

her a

ssets

- net

4,164

,776

-

-

-

2,971,

769

-

64,34

1 98

,608

-

88,57

8 27

,795

25,55

7 88

8,128

-

122

,764,5

87

36,99

3,069

14,

400,4

73

550,6

65

5,046

,760

18,02

1,130

3,511,0

34

6,923

,771

1,014,

538

3,902

,640

7,006

,246

2,842

,178

7,935

,246

14,616

,837

Liabil

ities

Bills p

ayab

le 87

7,017

87

7,017

-

-

-

-

-

-

-

-

-

-

-

- Bo

rrowi

ngs

39,78

0,603

16,

462,6

69

7,862

,440

-

8,5

57,76

2 40

0,000

3,9

65,20

0 1,3

68,50

0 30

,000

-

-

15,89

3 124

,373

993,7

66

Depo

sits a

nd ot

her a

ccou

nts

65,22

5,052

36

,227,3

67

920,0

41

660,0

00

4,972

,589

6,725

,708

3,198

,378

6,751,

128

3,872

,662

1,577

,515

143,77

6 135

,946

39,94

2 -

Liabil

ities a

gains

t asse

ts su

bject

to

fi

nanc

e lea

se

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Subo

rdina

ted de

bt -

-

-

-

-

-

-

-

-

-

-

-

-

-

De

ferred

tax l

iabilit

ies

-

-

-

-

-

-

-

-

-

-

-

-

- -

Othe

r liab

ilities

4,0

98,16

0 -

-

- 1,5

11,009

-

1,9

25,27

7 210

,715

-

115,84

3 2,2

45

2,130

33

0,941

-

109

,980,8

32

53,56

7,053

8,7

82,48

1 66

0,000

15,

041,3

60

7,125

,708

9,088

,855

8,330

,343

3,902

,662

1,693

,358

146,02

1 153

,969

495,2

56

993,7

66

Net a

sset

s 12,

783,7

55 (

16,57

3,984

) 5,6

17,99

2 (10

9,335

) (9,

994,6

00)

10,89

5,422

(5

,577,8

21)

(1,40

6,572

) (2

,888,1

24)

2,209

,282

6,860

,225

2,688

,209

7,439

,990

13,62

3,071

Share

capit

al 10,

082,3

87

Re

serve

s 69

1,997

Unap

propr

iated

profi

t 2,3

89,38

6

Defic

it on r

evalu

ation

of as

sets

(380

,015)

12,

783,7

55

(Rup

ees

in '0

00)

Tota

lUp

to 1

day

Over

1 to

7 da

ysOv

er 7

to14

day

sOv

er 1

to 2

m

onth

sOv

er 2

to 3

m

onth

sOv

er 3

to 6

m

onth

sOv

er 6

to 9

m

onth

sOv

er 1

to 2

ye

ars

Over

2 to

3

year

sOv

er 3

to 5

ye

ars

Over

5

year

s

Over

9

mon

ths

to 1

year

Over

14

days

to 1

mon

th

2018

97

98

Asse

ts

Cash

and b

alanc

es w

ith tr

easu

ry ba

nks

3,887

,745

3,887

,745

-

-

-

-

-

-

-

-

-

-

-

-

Balan

ces w

ith ot

her b

anks

127

,386

127,38

6 -

-

-

-

-

-

-

-

-

-

-

-

Le

nding

to fi

nanc

ial in

stitu

tions

5,1

92,95

0

3,192

,950

-

2,0

00,00

0

-

-

-

-

-

-

-

-

-

-

Inves

tmen

ts - n

et

62,91

8,102

5,4

97,28

3 -

-

9,6

63,01

3 49

6,259

1,5

54,80

1 -

6,

389,9

95

862,6

79

11,678

,274

11,069

,291

12,119

,764

3,586

,743

Adva

nces

- net

40

,181,7

73

16,30

4,500

1,5

64,35

9 2,8

58,99

8 1,4

06,26

4 3,0

18,64

0

1,686

,801

4,480

,377

375,0

61

1,396

,547

833,5

33

1,492

,830

3,0

34,14

7 1,7

29,71

6 Fix

ed as

sets

1,11

3,248

-

-

-

10

,092

714

714

8,182

42

,884

42,88

4 40

,122

110,50

0

122,74

2 73

4,415

In

tang

ible a

sset

s 133

,370

-

-

-

1,2

09

85

85

980

5,1

38

5,138

4,8

07

13,23

8 14

,704

87,98

5 De

ferre

d tax

asse

ts - n

et

436,8

16

-

-

-

-

-

-

-

40,40

1 40

,401

185,4

81

63,94

8 (9

7,711)

20

4,296

Ot

her a

sset

s - ne

t 4,2

32,118

-

-

-

3,49

4,662

26

,519

26,51

9 66

,129

24,53

7 24

,537

9,997

13,

521

545,6

97

-

118

,223,5

08

29,00

9,864

3,5

64,35

9 2,8

58,99

8 14

,575,2

40

3,542

,217

3,268

,920

4,5

55,66

8 6,8

78,01

6 2,3

72,18

6 12

,752,2

14

12,76

3,328

15

,739,3

43

6,343

,155

Liabi

litie

s

Bi

lls pa

yable

68

6,692

68

6,692

-

-

-

-

-

-

-

-

-

-

-

-

Bo

rrowi

ngs

46,20

1,468

1,0

00,00

0

20,04

0,601

19,

442,6

11

2,597

,865

1,225

,000

56

2,000

83

8,000

-

-

-

-

110

,549

38

4,842

De

posit

s and

othe

r acc

ount

s 54

,901,4

64

31,56

9,264

26

4,404

75

4,741

2,1

94,80

3 2,6

98,86

6 3,0

92,30

9 6,5

24,92

1 4,6

51,23

8 2,8

93,77

9 4,

198

236,8

46

16,09

5 -

Lia

biliti

es ag

ainst

asse

ts su

bject

to

fina

nce l

ease

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Subo

rdina

ted d

ebt

-

-

-

-

-

-

-

-

-

-

-

-

-

-

De

ferre

d tax

liabil

ities

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Othe

r liab

ilities

3,7

25,69

0

-

-

-

2,075

,412

487,1

29

487,1

29

216,0

40

64,07

4 64

,074

59

3,294

32

8,479

-

105,5

15,31

4 33

,255,9

56

20,30

5,005

20

,197,3

52

6,868

,080

4,4

10,99

5 4,1

41,43

8 7,5

78,96

1 4,7

15,31

2 2,9

57,85

3 4,2

57

240,1

40

455,1

23

384,8

42

Net a

sset

s 12

,708,1

94

(4,24

6,092

) (16

,740,6

46)

(17,33

8,354

) 7,7

07,16

0

(868

,778)

(8

72,51

8)

(3,02

3,293

) 2,1

62,70

4 (5

85,66

7)

12,74

7,957

12

,523,1

88

15,28

4,220

5,9

58,31

3

Shar

e cap

ital

10,08

2,387

Rese

rves

55

5,451

Unap

prop

riate

d pro

fit

1,843

,203

Su

rplus

on re

valua

tion o

f ass

ets

227,1

53

12,70

8,194

(Rup

ees

in '0

00)

Tota

lUp

to 1

day

Over

1 to

7 da

ysOv

er 7

to14

day

sOv

er 1

to 2

m

onth

sOv

er 2

to 3

m

onth

sOv

er 3

to 6

m

onth

sOv

er 6

to 9

m

onth

sOv

er 1

to 2

ye

ars

Over

2 to

3

year

sOv

er 3

to 5

ye

ars

Over

5

year

s

Over

9

mon

ths

to 1

year

Over

14

days

to 1

mon

th

2017

(Res

tate

d)

42.4.2 Maturities of assets and liabilities - based on expected maturities of the assets and liabilities of the Bank

2018

Upto one Over 1 to Over 3 to Over 6 Over 1 to 2 Over 2 to Over 3 to Over 5 to Above

Total month 3 months 6 months months to years 3 years 5 years 10 years 10 years

1 year

Assets Cash and balances with treasury banks 5,154,790 2,015,523 905,930 562,186 395,119 321,820 321,475 632,737 - - Balances with other banks 496,174 496,174 - - - - - - - - Lending to financial institutions 9,449,244 9,449,244 - - - - - - - - Investments - net 48,021,370 10,860,289 15,811,534 - 1,359,857 5,930,974 1,425,337 1,994,479 10,638,900 - Advances - net 53,592,255 14,235,130 10,560,538 10,842,153 8,138,192 890,969 1,256,971 4,669,589 2,998,713 - Fixed assets 1,064,563 507 586 2,405 8,625 73,767 67,193 259,845 76,339 575,295 Intangible assets 120,648 58 66 273 978 8,360 7,615 29,448 8,652 65,198 Deferred tax assets - net 700,767 - - - 219,385 74,381 59,505 93,756 253,740 - Other assets - net 4,164,776 2,971,769 64,341 98,608 88,578 27,795 25,557 888,128 - - 122,764,587 40,028,694 27,342,995 11,505,625 10,210,734 7,328,066 3,163,653 8,567,982 13,976,344 640,493 Liabilities Bills payable 877,017 877,017 - - - - - - - - Borrowings 39,780,603 32,882,871 4,365,200 1,368,500 30,000 - 15,893 124,374 993,765 - Deposits and other accounts 65,225,052 14,061,411 14,733,114 10,288,629 7,577,244 4,705,024 4,697,193 9,162,437 - - Liabilities against assets subject to finance lease - - - - - - - - - - Subordinated debt - - - - - - - - - - Deferred tax liabilities - - - - - - - - - - Other liabilities 4,098,160 1,511,009 1,925,277 210,715 115,843 2,245 2,130 330,941 - - 109,980,832 49,332,308 21,023,591 11,867,844 7,723,087 4,707,269 4,715,216 9,617,752 993,765 - Net assets 12,783,755 (9,303,614) 6,319,404 (362,219) 2,487,647 2,620,797 (1,551,563) (1,049,770) 12,982,579 640,493 Share capital 10,082,387 Reserves 691,997 Unappropriated profit 2,389,386 Deficit on revaluation of assets (380,015) 12,783,755

(Rupees in '000)

2017

Upto one Over 1 to Over 3 to Over 6 Over 1 to 2 Over 2 to Over 3 to Over 5 to Above

Total month 3 months 6 months months to years 3 years 5 years 10 years 10 years

1 year

Assets Cash and balances with treasury banks 3,887,745 1,383,297 644,287 456,202 408,171 246,736 255,297 493,755 - - Balances with other banks 127,386 127,386 - - - - - - - - Lending to financial institutions 5,192,950 5,192,950 - - - - - - - - Investments - net 62,918,102 15,160,295 2,051,060 - 7,252,674 11,678,274 11,069,291 12,119,764 3,586,744 - Advances - net 40,181,773 12,146,670 10,200,539 9,095,467 1,994,810 833,533 1,492,830 3,034,147 1,383,777 - Fixed assets 1,113,248 10,092 1,428 8,182 85,768 40,122 110,500 122,742 210,531 523,883 Intangible assets 133,370 1,210 171 980 10,275 4,807 13,238 14,704 25,223 62,762 Deferred tax assets - net 436,816 - - - 80,802 185,481 63,948 (97,711) 204,296 - Other assets - net 4,232,118 3,494,662 53,037 66,129 49,075 9,997 13,521 545,697 - - 118,223,508 37,516,562 12,950,522 9,626,960 9,881,575 12,998,950 13,018,625 16,233,098 5,410,571 586,645 Liabilities Bills payable 686,692 686,692 - - - - - - - - Borrowings 46,201,468 43,081,077 1,787,000 838,000 - - - 110,549 384,842 - Deposits and other accounts 54,901,464 10,097,014 10,781,629 9,506,489 9,449,471 3,706,629 3,939,276 7,420,956 - - Liabilities against assets subject to finance lease - - - - - - - - - - Subordinated debt - - - - - - - - - - Deferred tax liabilities - - - - - - - - - - Other liabilities 3,725,690 2,075,412 974,258 216,040 128,148 59 3,294 328,479 - - 105,515,314 55,940,195 13,542,887 10,560,529 9,577,619 3,706,688 3,942,570 7,859,984 384,842 - Net assets 12,708,194 (18,423,633) (592,365) (933,569) 303,956 9,292,262 9,076,055 8,373,114 5,025,729 586,645 Share capital/ Head office capital account 10,082,387 Reserves 555,451 Unappropriated profit 1,843,203 Surplus on revaluation of assets 227,153 12,708,194

(Rupees in '000)

99

100

43 GENERAL

43.1 Corresponding figures have been re-arranged and reclassified, wherever necessary, for better presentation. There have been no significant reclassifications during the year except for the following:

Particulars

Before reclassification as at December

31, 2017

After reclassification as at December

31, 2017

Reclassification

(Rupees in ‘000)

Statement of financial position

Other assets - acceptances 3,159,657 1,072,461 4,232,118

Other liabilities - acceptances 2,653,229 1,072,461 3,725,690

Fixed assets 1,246,618 (133,370) 1,113,248

Intangible assets - - 133,370 133,370

Equity 12,481,041 227,153 12,708,194

Particulars


31, 2017


31, 2017

Reclassification

(Rupees in ‘000)


Gain on securities 94,300 (42) 94,258

Unrealised loss on revaluation of investments classified as

held for trading - net (42) 42 - -

Workers' Welfare Fund - - 19,014 19,014

Other charges 19,050 (19,014) 36

Provisions and write offs - net - - (101,412) (101,412)

Provision against loans and advances - net 126,887 (126,887) - -

Reversal of provision for diminution in the value of investments (16,766) 16,766 - -

Recoveries against debts written off (10,941) 10,941 - -

Other provisions / write offs - net 2,232 (2,232) - -

Particulars


31, 2016


31, 2016

Reclassification

(Rupees in ‘000)

Statement of financial position

Other assets - acceptances 2,701,360 1,685,244 4,386,604

Other liabilities - acceptances 2,026,015 1,685,244 3,711,259

Fixed assets 1,458,715 (168,708) 1,290,007

Intangible assets - - 168,708 168,708

Equity 11,742,188 577,336 12,319,524

43.2 Figures have been rounded off to the nearest thousand rupees.

44 NON-ADJUSTING EVENTS AFTER THE BALANCE SHEET DATE

Finance Supplementary (Second Amendment) Bill, 2019 laid down before the National Assembly of Pakistan on January 23, 2019, amended the rate of Super Tax noted in the earlier Finance Act 2018 and prescribed a flat rate of 4% super tax for all accounting years from 2017 to 2020.

Since the above change in tax rates has been announced after the balance sheet date, it has been treated as non adjusting event under IAS 10 “Events after the reporting period” and no financial impact has been taken in the current year financial statements.

45 DATE OF AUTHORISATION

These financial statements were approved and authorised for issue on February 20, 2019 by the Board of Directors of the Bank.


101

102

Firdo

us Te

xtile

Mill

s Lim

ited

3rd

Floor

, Ban

k Hou

se N

o. 3,

Habi

b Sq

uare

,M.

A. Ji

nnah

Roa

d, Ka

rach

i.

Tota

l

Mr. E

hsan

Elah

i 42

000-

1557

756-

1Mr

. Soh

ail E

lahi

42

201-7

1083

62-5

Mr. Z

ahid

Elah

i 42

201-7

7375

42-5

Haji

Muha

mm

ad H

ussa

inEh

san

Elah

iEh

san

Elah

i

3,

528

-

-

3,

528

2,

628

-

33

,459

36

,087

3,528

-

-

3,

528

2,

628

-

33

,459

36

,087

STAT

EMEN

T SH

OW

ING

WR

ITTE

N-O

FF L

OA

NS

OR

AN

Y O

THER

FIN

AN

CIA

L R

ELIE

FO

F R

UPE

ES F

IVE

HU

ND

RED

TH

OU

SAN

D O

R A

BOV

E PR

OVID

ED

DURIN

G THE

YEAR

ENDE

D DEC

EMBE

R 31, 2

018

ANNE

XURE

- I

S.No.

Name

and a

ddre

ss of

the b

orro

wer

Name

of th

e ind

ividu

als /

partn

ers /

direc

tors

CNIC

No.

Fath

er's

/ Hus

band

's na

me

Outs

tand

ing lia

biliti

es at

the b

eginn

ing of

the y

ear

Princ

ipal

Inte

rest

/ Ma

rk-u

p

Othe

r tha

n In

tere

st /

Mark

-up

Tota

l

Princ

ipal

writt

en of

f

Inte

rest

/ Ma

rk-u

pwr

itten

off

Othe

r fin

ancia

lre

lief

prov

ided

waive

d

Tota

l

(Rup

ees i

n ‘00

0)

1

Ravi

Ente

rpris

es P

rivat

e Lim

ited.

75-D

1, Ma

in B

oulev

ard,

Gulb

erg

III, L

ahor

e.

Ham

id Te

xtile

Mill

s Lim

ited

Chan

ga M

anga

Roa

d, Wa

n Ad

han,

Patto

ki, D

istt.

Kasu

r.

Bush

ra R

ehm

anH/

No. 2

8/A,

Mat

een

Aven

ueHo

usin

g Sc

hem

e, Co

llege

Roa

d, Ne

ar B

utt C

howk

,To

wnsh

ip, L

ahor

e.

Tota

l

Mr. O

mer

Faro

oq

3520

2-48

7440

9-7

Kh. A

sad

Faro

oq

3520

2-387

0480

-3

Mr. K

hawa

r Alm

as K

h 33

100-

1031

366-

5Mr

s. Ni

ghat

Kha

war

3310

0-09

2456

6-0

Mr. M

uham

mad

Ala

mgi

r 35

101-3

1057

43-5

Mr. D

ilsha

d Al

i 35

202-

0633

905-

9Mr

s. Zu

labi

a An

dlee

b 35

202-3

1660

25-2

Mr. B

asim

Dish

ad

3520

2-55

2978

1-3

Bush

ra R

ehm

an

3520

2-746

7220

-0

Kh. A

bdul

Hak

eem

Kh. A

bdul

Hak

eem

Kh. M

uham

mad

Sha

rifKh

awar

Alm

as K

h.Mu

ham

mad

Sid

diqu

eFa

rzan

d Al

iDi

lshad

Ali

Dilsh

ad A

li

Muha

mm

ad S

arwa

r Zoh

aib

1

0,058

1,1

98

1,59

4

12,85

0

58

1,1

98

38,84

2 4

0,098

2,0

52

-

65

2,

117

451

-

9,

706

10

,157

31

1 -

5

57

868

11

7 -

5

57

674

12

,421

1,198

2,

216

15

,835

6

26

1,198

4

9,105

5

0,929

STAT

EMEN

T SH

OW

ING

WR

ITTE

N-O

FF L

OA

NS

OR

AN

Y O

THER

FIN

AN

CIA

L R

ELIE

FO

F R

UPE

ES F

IVE

HU

ND

RED

TH

OU

SAN

D O

R A

BOV

E PR

OVID

ED

DURIN

G THE

YEAR

ENDE

D DEC

EMBE

R 31, 2

017

(Res

tate

d)

S.No.

Name

and a

ddre

ss of

the b

orro

wer

Name

of th

e ind

ividu

als /

partn

ers /

direc

tors

CNIC

No.

Fath

er's

/ Hus

band

's na

me

Outs

tand

ing lia

biliti

es at

the b

eginn

ing of

the y

ear

Princ

ipal

Inte

rest

/ Ma

rk-u

p

Othe

r tha

n In

tere

st /

Mark

-up

Tota

l

Princ

ipal

writt

en of

f

Inte

rest

/ Ma

rk-u

pwr

itten

off

Othe

r fin

ancia

lre

lief

prov

ided

waive

d

Tota

l

(Rup

ees i

n ‘00

0)

1 2 3

DescriptionAccumulateddepreciation

Gain /(loss)

Saleproceeds

BookValueCost Mode of disposal Particulars of buyers

ANNEXURE - I I11.3 Disposal of fixed assets

Details of disposal of fixed assets to executives and other persons are given below:

(Rupees in '000) Owned vehicles Mercedes E200 CGI AZY-860 9,610 5,497 4,113 4,113 - - As per terms of Shahid Sattar

employment (President & CEO) Honda City AQE-389 879 580 299 624 325 Through tender Waseem Mirza Honda Civic VTI BAW-093 2,491 1,644 847 1,483 636 Through tender Maaz Saleem Honda City BBZ-813 1,552 768 784 1,084 300 Through tender Waseem Mirza Toyota Corolla Altis AUY-926 1,928 1,272 656 1,064 408 Through tender Waseem Mirza Toyota Corolla Altis AVR-313 1,951 1,288 663 1,274 611 Through tender Waseem Mirza Toyota Corolla GLI 1.3 AYE-318 1,694 1,118 576 1,252 676 Through tender Naveed Hussain Toyota Corolla Altis AUY-925 1,928 1,272 656 1,093 437 Through tender Noman Ahmed 22,033 13,439 8,594 11,987 3,393 Furniture and fixtures Glass Doors at Clifton Branch 454 416 38 200 162 Through tender Renovation at Clifton Branch 9,519 7,554 1,965 - - (1,965 ) Write Off Renovation at Sarwar Road Branch 7,340 7,194 146 - - (146 ) Write Off 17,313 15,164 2,149 200 (1,949 ) Electrical, office and computer equipment / Intangibles Air conditioning unit 102 102 - - 18 18 Through tender Al-Hamd Traders Genset 3KA for Beach Hut 32 32 - - 13 13 Through tender Ismail Corporation Mobile phone 90 83 7 12 5 As per policy Shahid Sattar 224 217 7 43 36 (President & CEO) 2018 39,570 28,820 10,750 12,230 1,480 2017 71,414 68,616 2,798 803 (1,995 ) Assets sold to Related Parties During the year no assets were sold to the chief executive, directors, executives or to a shareholder holding not less than ten percent of the voting shares of the Bank other than

those disclosed above.

103

104

Pattern of ShareholdingAS AT DECEMBER 31, 2018

Number of

Shareholders

Shareholding Total Shares

heldFrom To

1,503 1 100 66,260

1,884 101 500 495,833

745 501 1,000 537,638

737 1,001 5,000 1,594,809

134 5,001 10,000 923,091

58 10,001 15,000 716,310

28 15,001 20,000 493,019

17 20,001 25,000 376,002

19 25,001 30,000 525,458

7 30,001 35,000 227,176

7 35,001 40,000 263,244

8 40,001 45,000 343,751

7 45,001 50,000 339,560

4 50,001 55,000 205,802

12 55,001 60,000 685,390

3 60,001 65,000 190,488

2 70,001 75,000 143,979

1 75,001 80,000 77,526

1 80,001 85,000 84,000

5 90,001 95,000 458,820

3 95,001 100,000 295,500

5 100,001 105,000 511,073

1 105,001 110,000 108,000

3 110,001 115,000 335,639

1 120,000 125,000 120,000

1 125,001 130,000 129,962

1 145,001 150,000 148,157

2 150,001 155,000 304,529

1 155,001 160,000 156,383

1 160,001 165,000 160,596

1 170,001 175,000 173,848

1 175,001 180,000 175,915

1 190,001 195,000 191,476

2 195,001 200,000 396,858

1 210,001 215,000 211,437

1 215,001 220,000 218,500

1 220,001 225,000 224,657

1 230,001 235,000 230,720

2 235,001 240,000 471,972

2 250,000 255,000 503,843

1 280,001 285,000 281,916

1 295,001 300,000 295,664

1 300,001 305,000 300,100

1 305,001 310,000 308,379

1 315,001 320,000 319,149

1 405,001 410,000 409,818

1 410,001 415,000 412,000

1 415,001 420,000 419,326

1 425,001 430,000 429,290

1 460,001 465,000 464,445

1 475,001 480,000 479,739

1 560,001 565,000 563,832

1 620,001 625,000 622,532

1 940,001 945,000 941,599

1 1,150,001 1,155,000 1,154,800

1 1,205,000 1,210,000 1,205,000

1 1,650,001 1,655,000 1,652,306

1 1,690,001 1,695,000 1,690,620

1 2,345,001 2,350,000 2,345,804

1 2,550,001 2,555,000 2,553,784

1 2,635,001 2,640,000 2,635,899

1 2,760,001 2,765,000 2,764,113

1 11,935,001 11,940,000 11,936,420

1 12,500,001 12,505,000 12,500,500

1 15,815,001 15,820,000 15,817,500

1 20,785,001 20,790,000 20,788,998

1 23,250,001 23,255,000 23,254,939

1 35,830,001 35,835,000 35,832,424

1 852,040,001 852,045,000 852,040,531

5,243 1,008,238,648

Number of

Shareholders


heldFrom To

1,503 1 100 66,260

1,884 101 500 495,833

745 501 1,000 537,638

737 1,001 5,000 1,594,809

134 5,001 10,000 923,091

58 10,001 15,000 716,310

28 15,001 20,000 493,019

17 20,001 25,000 376,002

19 25,001 30,000 525,458

7 30,001 35,000 227,176

7 35,001 40,000 263,244

8 40,001 45,000 343,751

7 45,001 50,000 339,560

4 50,001 55,000 205,802

12 55,001 60,000 685,390

3 60,001 65,000 190,488

2 70,001 75,000 143,979

1 75,001 80,000 77,526

1 80,001 85,000 84,000

5 90,001 95,000 458,820

3 95,001 100,000 295,500

5 100,001 105,000 511,073

1 105,001 110,000 108,000

3 110,001 115,000 335,639

1 120,000 125,000 120,000

1 125,001 130,000 129,962

1 145,001 150,000 148,157

2 150,001 155,000 304,529

1 155,001 160,000 156,383

1 160,001 165,000 160,596

1 170,001 175,000 173,848

1 175,001 180,000 175,915

1 190,001 195,000 191,476

2 195,001 200,000 396,858

1 210,001 215,000 211,437

1 215,001 220,000 218,500

1 220,001 225,000 224,657

1 230,001 235,000 230,720

2 235,001 240,000 471,972

2 250,000 255,000 503,843

1 280,001 285,000 281,916

1 295,001 300,000 295,664

1 300,001 305,000 300,100

1 305,001 310,000 308,379

1 315,001 320,000 319,149

1 405,001 410,000 409,818

1 410,001 415,000 412,000

1 415,001 420,000 419,326

1 425,001 430,000 429,290

1 460,001 465,000 464,445

1 475,001 480,000 479,739

1 560,001 565,000 563,832

1 620,001 625,000 622,532

1 940,001 945,000 941,599

1 1,150,001 1,155,000 1,154,800

1 1,205,000 1,210,000 1,205,000

1 1,650,001 1,655,000 1,652,306

1 1,690,001 1,695,000 1,690,620

1 2,345,001 2,350,000 2,345,804

1 2,550,001 2,555,000 2,553,784

1 2,635,001 2,640,000 2,635,899

1 2,760,001 2,765,000 2,764,113

1 11,935,001 11,940,000 11,936,420

1 12,500,001 12,505,000 12,500,500

1 15,815,001 15,820,000 15,817,500

1 20,785,001 20,790,000 20,788,998

1 23,250,001 23,255,000 23,254,939

1 35,830,001 35,835,000 35,832,424

1 852,040,001 852,045,000 852,040,531

5,243 1,008,238,648

105

106

1,503 1 100 66,260

1,884 101 500 495,833

745 501 1,000 537,638

737 1,001 5,000 1,594,809

134 5,001 10,000 923,091

58 10,001 15,000 716,310

28 15,001 20,000 493,019

17 20,001 25,000 376,002

19 25,001 30,000 525,458

7 30,001 35,000 227,176

7 35,001 40,000 263,244

8 40,001 45,000 343,751

7 45,001 50,000 339,560

4 50,001 55,000 205,802

12 55,001 60,000 685,390

3 60,001 65,000 190,488

2 70,001 75,000 143,979

1 75,001 80,000 77,526

1 80,001 85,000 84,000

5 90,001 95,000 458,820

3 95,001 100,000 295,500

5 100,001 105,000 511,073

1 105,001 110,000 108,000

3 110,001 115,000 335,639

1 120,000 125,000 120,000

1 125,001 130,000 129,962

1 145,001 150,000 148,157

2 150,001 155,000 304,529

1 155,001 160,000 156,383

1 160,001 165,000 160,596

1 170,001 175,000 173,848

1 175,001 180,000 175,915

1 190,001 195,000 191,476

2 195,001 200,000 396,858

1 210,001 215,000 211,437

1 215,001 220,000 218,500

1 220,001 225,000 224,657

1 230,001 235,000 230,720

2 235,001 240,000 471,972

2 250,000 255,000 503,843

1 280,001 285,000 281,916

1 295,001 300,000 295,664

1 300,001 305,000 300,100

1 305,001 310,000 308,379

1 315,001 320,000 319,149

1 405,001 410,000 409,818

1 410,001 415,000 412,000

1 415,001 420,000 419,326

1 425,001 430,000 429,290

1 460,001 465,000 464,445

1 475,001 480,000 479,739

1 560,001 565,000 563,832

1 620,001 625,000 622,532

1 940,001 945,000 941,599

Number of

Shareholders


heldFrom To

1 1,150,001 1,155,000 1,154,800

1 1,205,000 1,210,000 1,205,000

1 1,650,001 1,655,000 1,652,306

1 1,690,001 1,695,000 1,690,620

1 2,345,001 2,350,000 2,345,804

1 2,550,001 2,555,000 2,553,784

1 2,635,001 2,640,000 2,635,899

1 2,760,001 2,765,000 2,764,113

1 11,935,001 11,940,000 11,936,420

1 12,500,001 12,505,000 12,500,500

1 15,815,001 15,820,000 15,817,500

1 20,785,001 20,790,000 20,788,998

1 23,250,001 23,255,000 23,254,939

1 35,830,001 35,835,000 35,832,424

1 852,040,001 852,045,000 852,040,531

5,243 1,008,238,648

Category of ShareholdingAS AT DECEMBER 31, 2018

1 Directors, Chief Executive Officer, and their spouse and minor

children 6 49,490,005 4.91

2 Associated Companies, Undertakings and related Parties 1 852,040,531 84.51

3 NIT and ICP 2 25,297 0.00

4 Banks, Development Financial Institutions, Non Banking Financial Institutions 20 28,336 0.00

5 Insurance Companies 5 2,637,190 0.26

6 Modarabas and Mutual Funds 19 2,770,981 0.27

7 Share holders holding 10% 1 852,040,531 84.51

8 General Public :

a. local 5,076 17,354,696 1.72

b .Foreign 1 196 0.00

9 Others 113 83,891,416 8.32

Total (excluding : share holders holding 10%) 5,243 1,008,238,648 100.00

S.No. Shareholders' categoryNumber of

Shareholders

Number of

Shares%

107

108

Information as required under Code of Corporate GovernanceAS AT DECEMBER 31, 2018

i. Associated Companies, Undertakings and Related Parties

SAMBA FINANCIAL GROUP 852,040,531 84.51

ii. Mutual Funds

CDC - TRUSTEE AKD OPPORTUNITY FUND 412,000 0.04

CDC - TRUSTEE NATIONAL INVESTMENT (UNIT) TRUST 2,345,804 0.23

M/S. ASIAN STOCKS FUND LIMITED 99 0.00

M/S. SAFEWAY FUND LIMITED 263 0.00

iii. Directors, CEO and Their Spouse(s) and minor children

SHAHID SATTAR 1,154,800 0.11

SHAHBAZ HAIDER AGHA 500 0.00

HUMAYUN MURAD 1,281 0.00

SHUJAAT NADEEM 35,832,424 3.55

NADEEM BABAR 12,500,500 1.24

ARJUMAND AHMED MINAI 500 0.00

iv. Executives 295 0.00

v. Public Sector Companies and Corporations 2,635,899 0.26

vi. Banks, Development Finance Institutions, Non-Banking Finance Institutions, Insurance

Companies, Takaful, Modaraba and Pension Funds 664,974 0.07

vii. NIT & ICP 25,297 0.00

viii. General Public

a. Local 17,354,401 1.72

b. Foreign 196 0.00

ix. Others 83,268,884 8.26

1,008,238,648 100.00

x. Shareholders Holding five percent or more Voting Rights in

the Listed Company

SAMBA FINANCIAL GROUP 852,040,531 84.51

During the year, no trade in the shares of the Bank was carried out by the Directors, CFO and Company Secretary and their spouses

and minor children, except, Mr. Shahid Sattar, was sold 133,500 shares, after meeting all regulatory and diclosure requirement.

Shareholders' categoryNumber of

Shares Held%

I / We, of being member(s) of Samba Bank Limited

(the Bank) holding ordinary shares hereby appoint of

or failing him / her of who is / are also member(s) of Samba Bank Limited as

my / our proxy in my / our absence to attend and vote for me / us and on my / our behalf at the Annual General Meeting of the Bank to be

held at 10:00 a.m. on Wednesday, the 27th March, 2019 at Hotel Serena, Islamabad and at any adjournment thereof.

As witness my / our hand / seal this day of 2019.

Signed by the said

in the presence of 1.

2.

Folio / CDC Account No.

Important:

1. This Proxy Form, duly completed and signed, must be received at the Registered Office of the Bank, 2nd Floor Building # 13-T, F-7 Markaz,

near to Post Mall, Islamabad, not less than 48 hours before the time of holding the meeting.

2. No person shall act as proxy unless he himself is a member of the Bank, except that a corporation may appoint a person who is not a

member.

3. If a member appoints more than one proxy and more than one instruments of proxy are deposited by a member with the Bank, all such

instruments of proxy shall be rendered invalid.

For CDC Account Holders / Corporate Entities:

In addition to the above the following requirements have to be met:

i) The proxy form shall be witnessed by the persons whose names, addresses and CNIC numbers shall be mentioned on the form.

ii) Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy form.

iii) The proxy shall produce his original CNIC or original passport at the time of the meeting.

iv) In case of corporate entity, the Board of Directors resolution / power of attorney with specimen signature shall be submitted (unless it

has been provided earlier) alongwith proxy form to the company.

Please affix here Revenue

Stamp of Rs. 5/-

Form of Proxy16th Annual General Meeting

Samba Bank Limited

109

The Company Secretary

AFFIXCORRECTPOSTAGE

2nd Floor, Building # 13-T, F-7 Markaz, Near Post Mall,Islamabad.

Name

Folio No. / CDC I.D

No. of Shares held

Signature

Note:

i) The signature of the shareholder must tally with the specimen signature on the Company’s record.

ii) Shareholders are requested to hand over duly completed admission slip at the counter before entering the Meeting premises.

CDC Account Holders / Proxies / Corporate Entities:

a) The CDC Account Holder / Proxy shall authenticate his identity by showing his original Computerized National Identity Card (CNIC) or original passport at the time of attending the Meeting.

b) In case of corporate entity, the Board of Directors’ resolution / power of attorney with specimen signature of the nominee shall be produced at the time of the Meeting (unless it has been provided earlier).

This Admission Slip is Not Transferable

The sixteenth Annual General Meeting of Samba Bank Limited will be held on Wednesday, March 27, 2019 at 10:00 a.m. at Hotel Serena, Islamabad.

Kindly bring this slip duly signed by you for attending the Meeting.

Samba Bank Limited

ADMISSION SLIP

Company Secretary

113

samba ar 2018 cover - financials.psx.com.pk

Documents